Mergers & Acquisitions Accounting, a Practitioner's Perspective

This half semester course will explore the financial reporting aspects of an array of common M&A transactions. Companies pursue transactions for a variety of reasons, but the fundamental reason is value creation. The financial statements are the primary means through which management communicates what was acquired, how it plans to create value and ultimately a scorecard of their success. We will discuss numerous examples to gain an understanding of how transaction motivations can drive the structure of a transaction and in turn dramatically change how it is reported. While we will touch on the perspectives of all participants in the financial reporting ecosystem at times, the primary focus is on the users of this information. Specifically, this means gaining an understanding of the information content of financial reports as it relates to transactions. Finally, we will touch on how the emerging area of ESG reporting fits into the picture. The objective is to obtain a level of literacy with respect to the accounting and reporting considerations relevant to transactions to enable the student to become an effective deal advisor. Substantive areas covered include: ● Going it alone and the missing intangibles – Whether a company develops its own assets in house or gets access to them from third parties there is often a significant mismatch between when the cost and benefit appear in earnings. ● Alliances and joint ventures - The risk reward relationship is different than going it alone, the impact on reported results can be significant. ● Acquisitions - We will explore adding value through financial due diligence, understand the reporting implications of various M&A structures with a deep dive on contingent consideration and consider industry implications with a focus on banking deals. ● Harvesting value - What are the common structures to exit a business and what are the reporting implications for the seller and the divested business The focus will be from the perspective of a strategic player. We will address the interactions with financial investors at various stages.