M&A Accounting & Purchase Price Allocation

Overview

An analyst must understand mergers and acquisition accounting, as it’s crucial when properly building an M&A model and evaluating whether the deal makes financial sense. In this course, we cover the M&A accounting process, including fair value adjustments, calculating goodwill, deferred taxes, and various related fees and expenses. We also cover how a deal can be structured as either a stock purchase or an asset purchase and the resulting accounting implications. We will practice adding transaction adjustments to calculate a pro forma balance sheet, but we will also look at the impact of a transaction on the income statement and cash flow statement.

Highlights

• Learn the difference between mergers and acquisitions, as well as the reasons to engage in M&A
• Understand how an acquisition changes some of the core accounting principles
• Incorporate fair value adjustments and the impact on deferred taxes
• Calculate goodwill and what it represents
• Recognize how the deal structure may change the accounting for certain items
• Identify the treatment of debt issuance fees and transaction expenses

Objectives

• Understand the M&A accounting process, including purchase price allocation and the creation of Goodwill
• Learn how fair value adjustments, as well as the transaction's structure, impacts deferred taxes
• Create a pro forma (combined) balance sheet with appropriate transaction adjustments

Preparation

Attendees should have a basic understanding of accounting fundamentals and reading financial statements.