Hi all, have a quick question about about how to think about this scenario:
Let's say Company A is acquiring Company B and we are modeling a transaction date of 6/30/20. Both companies have FYE 12/31. When doing the accretion /dilution math, do we add half-year financials for 2020 of Company B to Company A, or do we add the full 2020 year financials? Thanks!
| +3,212 | Bank of America - Juniors Strike to start Monday May 6th | 323 | 3m | |
| +768 | BOFA ALREADY TRYING TO COVER UP THEIR TRACKS | 78 | 1h | |
| +486 | This is a dark day for Wall Street. | 30 | 12h | |
| +165 | Big Layoff at Barclays - 5/1/24 | 87 | 7h | |
| +161 | Analyst at Bofa FIG-Thoughts | 26 | 6h | |
| +123 | “Americans just work harder” | 54 | 1d | |
| +117 | How to strike without being fired. | 17 | 35m | |
| +116 | BofA List | 24 | 28m | |
| +112 | Shame on you, BofA. But also, the industry needs to change. | 16 | 10h | |
| +72 | Sleeping on Jefferies??? | 35 | 1d |
Career Resources
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
You would add LTM company B financials to your close date.
Hm so you would consolidate 12 months of Company B financials even if you haven't owned them for 12 months? Like for example, if the closing date were 6/30/20, would FY2020 revenue (as of 12/31) for Company A be full year FY 2020 Company A revenue + full year FY 2020 Company B revenue, even though Company B has only been a part of the company for 6 months?
It generally depends on the purpose of the a/d and what point you are trying to get across. At least for my bank, we generally do the a/d on the full year following close so it gives the full view of the annual results. I can't think of much of a reason to look at a/d by year end when the transaction closes at 6/30 unless management is comped on it or something. In that case you would follow whatever is in their employment agreement.
Yes, you’ll usually see in 8-Ks or subsequent 10-Qs showing PF financial metrics for the last year or so once the merger goes through.
Got it, thanks. So not really a situation where we would stub financials? I guess it just seems weird to me to be giving the acquirer credit for the target's performance before it was actually purchased by the acquirer.
Et vitae ut esse velit. Quidem inventore est occaecati ut odit animi deleniti ex. Assumenda consectetur tenetur non provident impedit ipsum blanditiis.
Autem molestiae sit hic adipisci magnam quas sit. Aut qui qui quis temporibus aut aut. Id et debitis exercitationem porro assumenda explicabo.
Ducimus non sit sequi harum. Saepe mollitia autem occaecati illum dolor quibusdam officiis.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...