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What Is M&A Accounting and Who Can Do It For You?

Whether a company is being sold, merged, or reconstructed, finances can quickly get complicated. Aligning financial information between different entities can generate all types of challenges, especially if the companies diverge in any aspect of their accounting.

Managing multiple accounting systems while complying with industry and regulatory standards is outside of the realm of most in-house or third-party accounting teams. At the same time, consolidating financial statements properly is essential for a smooth post-acquisition integration process.

With so much on the line, companies undergoing a massive transformation often turn to firms that specialize in accounting for mergers and acquisitions.

Hiring an accounting firm that also offers M&A consulting is an excellent way to get experienced and professional support. M&A firms offer a myriad of accounting services that cater to companies at any stage of the transaction process.

What Is M&A Accounting

M&A accounting includes several financial processes that arise from the transformation of a company. M&A advisors offer a range of accounting services, including preparing financial documents, analyzing financial statements, reconciliation, and auditing.

Accounting firms with extensive experience in supporting companies in transition may advertise M&A-specific services.

The Benefits of M&A Accounting Services

Mergers and acquisitions change the entire setup of a company. These changes also extend to their accounting procedures. M&A professionals with an accounting background can support the transition process and ensure that the newly formed company can successfully implement new and compliant accounting processes.

M&A accounting is also important at the beginning of a transaction. Part of the M&A process includes due diligence, where the buyer reviews the seller’s books and assesses the company’s profitability. However, if the seller follows different accounting principles, it can be difficult to interpret their financial statements. Again, outsourcing these processes to an experienced M&A firm can save time and ensure that buyers get the best possible deal.

Why Choose a Professional Accounting Firm for M&A Accounting Services?

Unlike traditional accounting firms, M&A accounting firms are highly familiar with the complexity of merging two disparate accounting systems. Working with an experienced firm reduces the chances of delays, which can translate into financial losses during a merger or reconstruction.

Companies in search of a buyer can work with M&A consultants to analyze and organize their financial statements. A business with clear numbers and compliant records is more appealing to buyers.

Best M&A Accounting Agency to Work With

The right M&A firm offers an unbeatable combination of expertise, integrity, and efficiency.

The professional accounting firm, TGG Accounting all of these qualities and more through its proprietary TGG way. Under this approach, every client is assigned to a dedicated financial team that navigates the accounting process from start to finish. TGG also offers consulting with a certified exit planning advisor to guide owners looking to sell their businesses.

TGG’s ability to provide tailored, focused support makes it the leading provider of M&A consulting and accounting services.

Frequently Asked Questions About M&A Accounting

Accounting is an integral part of the mergers and acquisitions process. Find more information about M&A processes through the FAQ list below.

What are the main accounting methods used in M&A transactions?

M&A firms use one of two accounting methods: the pooling of interest method and the purchase method. Each method has its use cases, benefits, and limitations.

What is the purchase method of accounting in M&A?

The purchase method is an accounting process that assesses the effects of inventory purchases on the company’s balance sheet. This method is normally used by businesses that buy and sell goods.

What are some key financial statements impacted by M&A accounting?

Accounting for a merger or acquisition involves evaluating and producing essential financial documents such as cash flow statements, statements of financial position, and profit and loss statements.

How does M&A accounting impact taxation?

Changes to a company’s structure can trigger significant tax obligations. For example, companies acquiring subsidiaries based in other jurisdictions may be subjected to new taxes. Mergers or acquisitions can also impact tax-liable vehicles, such as stocks or securities.

What role do M&A accountants play in the due diligence process?

The due diligence process is a complex audit performed before a merger or acquisition. M&A advisors specializing in accounting may conduct tax due diligence to assess a company’s tax debts and payment history. Accounting firms also perform financial due diligence to verify the company’s financial statements.

How can M&A accounting help with post-merger integration?

An experienced M&A firm can integrate financials produced by diverse accounting principles. This allows the resulting company to begin with a singular, compliant accounting system.

Conclusion

Accounting is an overlooked, but essential aspect of the merger or acquisition process. M&A financials are too complex for traditional accounting firms to manage.

For this reason, many companies opt to outsource their accounting to a specialized agency. Working with an experienced M&A firm puts a company in a position of strength, whether they are the buyer or seller.