WHY PREDICTIVE ACCOUNTING?
Acquiring a company often signicantly impacts an investor’s key financial ratios. Ratios, such as the equity ratio or debt ratio, might change significantly depending on the transaction size and financing. Earn-out agreements, i.e. purchase price payments subject to retroactive conditions, might significantly influence the income situation, and the question whether to apply full or partial goodwill needs to be considered carefully, as future acquisitions of remaining shares also may have a significant impact on equity and related ratios.
Different transaction structures might also influence the asset and income situation. As a result, the expected consequences of an acquisition should be determined early on.
However, before the consequences can be determined, the general decisions on the accounting must be examined. Especially where accounting invol-ves company acquisitions under IFRS 3, this can be complex and at times requires signicant scope for discretion. Does an earn-out agreement form part of goodwill or are future remuneration expenses? Can any legal risks which have not yet been included under provisions be recognised as part of the purchase price allocation or must they be recorded at Day 1 after closing? And what to do about a gain from a bargain purchase, which is due to future restructuring measures?
WHAT SUPPORT DOES AUREN OFFER?
• Our advisors have many years of experience in consolidating and accounting for M&A transactions under German GAAP and IFRS. This enables us to simulate the accounting consequences of an acquisition on your asset and income situation, and changes the key value-driving parameters, so that you can identify potential risks affecting your key financial indicators in time, ultimately providing you with a better basis for your decision.
Moreover, our advisors contribute extensive technical and practical experience, which is required in order to answer any accounting questions that arise correctly in advance and at the same time ensure practicability.