Embed Size (px)
Citation preview
In the aftermath of the financial crisis, information used for assessing the financial history and future of a company – in the context of a transaction – is subject to more scrutiny than ever before.
Contractual arrangements for acquisitions and the relevant international GAAP on business combinations and consolidations are becoming increasingly complex. Corporate transactions are often tightly scheduled and a single deal can raise many issues for a business, across a range of areas. Decisions made in the course of a transaction can have a significant impact on both the future tax and financial situation of your business. It’s important to keep track of the big picture, identify interdependencies between individual disciplines and constantly monitor the effects, objectives and risks of the transaction.
Financial Accounting Advisory Services Transaction accounting
Working with you to develop the right transaction accounting solution for your business
Time is a key factor in a transaction. Companies are under pressure to make a large number of decisions that can have farreaching implications. It is important to monitor all potential effects of the transaction, as retrospective changes may be difficult.
Our transaction accounting advisory team focuses on the most effective way to present complex corporate transactions in your consolidated financial statements, while identifying the economic implications for your business. These transactions include acquisitions, sales of companies or individual operations (such as carveouts), acquisition financing or refinancing, IPOs, the formation of joint ventures and group reorganizations.
Our services are structured around the four key phases of a typical transaction. They are designed to give you confidence that accounting and reporting requirements have been considered at each phase. We also assess risks to help you avoid delays minimize their impact.
The transaction process – our services and solutions
Pre-deal phaseHow do we help?• Accounting due diligence for the target company• Presenting and assessing accounting, tax and legal alternatives for the transaction and
the related effects, opportunities and risks • Assessing alternative scenarios for the acquisition structure • Assessing the tax consequences of the transaction for your group
How do you benefit?• Detailed knowledge of accounting risks and support in managing them• Documentation of a transaction structure optimized for tax and accounting purposes,
enabling a smooth financial integration with your group
Contracting phaseHow do we help?• Analyzing accounting options, such as:
• Using put and/or call options to acquire majority and minority interests • Sharebased payment plans and the accounting effects of the contractual retention
of key employees• Contingent purchaseprice payments and earnout arrangements • Transfer of control• Restructuring measures
• Analyzing acquisition financing from an accounting and tax perspective, including:• Assessing equity versus debt financial instruments • Accounting for finance-related transaction costs • Assessing the accounting effects of embedded derivatives and fair value
measurement• Hedging interest payments using interest and currency derivatives • Refinancing and replacing existing finance and derivatives• Tax deductibility of financing expenses, taking into account tax restrictions on the va
rious levels of the group structure and an analysis of the accounting consequences• Accounting treatment of shareholder and vendor loans
• Using the company’s business forecasts to understand how alternative contractual arrangements could affect its future financial statements and key performance indicators
How do you benefit?• Comprehensive analysis of the transaction’s future accounting impacts, in various
scenarios• Contractual agreements optimized for accounting purposes• Clear guidance for decisionmakers
1.
2.
We will help you to assess the opportunities, risks and consequences of your transaction at an early stage and show you the effect it will have on various aspects of your group, including your balance sheet, income statement and cash flow statement; existing loan agreements and those entered into for the purpose of the transaction; key performance indicators and balance sheet ratios, such as EBITDA, EBIT, ROI and EPS; and remuneration systems.
Helping you understand the impacts of your transaction
Post
dea
l phase Predeal phase
Implem
enting phase Contracting
phas
e
Post
dea
l phase Predeal phase
Implem
enting phase Contracting
phas
e
Implementing phaseHow do we help?• Firsttime consolidation or deconsolidation• Preparing and auditing the closing accounts• Determining and reviewing working capital adjustments• Purchaseprice allocation • Advice on setting covenants for acquisition financing • Effect of accounting for employee stockownership plans on future earnings• Preparing and recording the fund flow• Preparing carve-out financial statements
How do you benefit?• Correct accounting in financial statements• Greater certainty when determining covenants• Optimized use of judgment in accounting
Post-deal phaseHow do we help?• GAAP conversion• Transactionrelated accounting issues after the deal:
• Transactions with minority shareholders • Setting up and performing impairment tests • Hedge accounting of interest rate and currency risks arising from the financing • Subsequent measurement of acquisition financing • Determining and posting purchase price adjustments• Subsequent measurement of earnout arrangements • Accounting for minority interests
• Harmonizing the acquiree’s financial reporting with your group’s accounting standards • Preparing an accounting policy manual and integrating it into your group’s reporting
system • Support in interpreting loan agreements and preparing a compliance certificate• Preparing bank reporting• Analyzing the effects of refinancing • Debt push-down of acquisition financing, taking into account tax restrictions
How do you benefit?• Efficient integration of the acquiree in your accounting and reporting structures• Effective conversion of the acquiree’s accounting
Taking a holistic view of your transaction and its impact on your business, our multi disciplinary transaction accounting team works closely with our transaction and tax professionals to provide you with a single source of endtoend support throughout the life cycle of your deal.
Looking across your deal to assess your individual requirements, we can develop a tailored solution that anticipates all aspects of the transaction process and helps you to move efficiently through the transaction. We help you to limit surprises and delays, and reduce time spent on posttransaction integration. Drawing on their extensive knowledge and deep crossborder experience and methodology, our teams respond quickly with tools and solutions that meet your requirements now, while assessing your future needs.
A multidisciplinary team driving your success
3.
4.
Help at every phase in the transaction life cycle
Post
dea
l phase Predeal phase
Implem
enting phase Contracting
phas
e
Post
dea
l phase Predeal phase
Implem
enting phase Contracting
phas
e
EY | Assurance | Tax | Transactions | Advisory
About EYEY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.
EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.
About Financial Accounting Advisory Services The changing accounting and reporting landscape provides challenges for multinational companies as they seek to respond to global market conditions and report on their financial results while facing increased scrutiny from a range of stakeholders.
EY’s accounting, regulatory, compliance and IT professionals combine technical expertise with business and industry insights to help clients navigate complexity. Whether your focus is on managing highly technical accounting requirements or addressing governance and regulatory issues, having the right advisors on your side can make all the difference.
Our team uses proven and integrated methodologies to help you solve your challenging business problems, deliver accurate financial reports in complex market conditions and make improvements sustainable for the longer term. We understand that you need services that are adapted to your specific industry issues, so we bring our broad sector experience and deep subject matter knowledge to your projects in a proactive and objective way.
© 2013 EYGM Limited.All Rights Reserved.
EYG No. AU1745SRE 0713144ED None
This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax or other professional advice. Please refer to your advisors for specific advice.
ey.com
Stefan Marc SchmidFAAS Leader Switzerland Financial Services+41 58 286 34 [email protected]
Contacts
Roger Müller FAAS Leader SwitzerlandAll other industries+41 58 286 33 [email protected]
