Deal Makers Beware—More Changes to Accounting for Acquisitions on the Horizon
- Topics:
- Decision Analysis
- Tags:
- Accounting,
- Investment,
- Financial Statements,
- Financial Services,
- Financial Accounting,
- Finance,
- Equity,
- Capital Eyes,
- Arrangement,
- Acquisition,
- ...
- Source:
- Capital Eyes
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Overview: The FASB's latest proposal would alter some longstanding accounting practices and could affect how transactions are structured. To date, the market has not made much noise regarding the proposed rules. Using a contingent consideration arrangement that qualifies as equity, since the proposed rules exempt arrangements considered equity from subsequent re-measurement. If commercially and economically feasible, this approach would alleviate earnings volatility while mitigating the buyer's overpayment risk. Understanding all acquired contingencies, since they could have a significant financial statement impact. This may require expanding your due diligence process to include developing an integration plan for the target before closing, so you can begin implementing the plan as soon as the deal is consummated.
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Format: HTML | Date: Mar 2003 | Pages: 1
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