Cash Flow Statement in M&A
IB
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(Senior Monkey, 93
Points)
on 10/8/09 at 8:28pm
I know how purchase accounting affects the balance sheet and the income statement in M&A accounting, but how is the cash flow statement of the buyer affected in mergers/acquisitions?





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when you adjust the IS,
when you adjust the IS, you'll add the two income statements together, adjusting for addtional interest expenses, lost interest income, synergies, additional depreciation from writeup etc. Additionaly, you'll make changes to financing and investing sections based upon how you paid for the company. From here you'd build the cash flow statement how you normally would in a model
Great, thanks. Would the
Great, thanks.
Would the effects of writing up assets to FMV be reflected anywhere on the cash flow statement, like the change in NWC under operating cash flows and the change in PP&E under investing cash flow?
As you mentioned, there will be additional depreciation because of the write-up (thus lowering net income on the cash flow statement) but will any other items be affected as well?