Help with a merger model.. Balance sheet won't balance

Hi all,

The issue is probably staring me straight in the face and I'm just missing it, but I figured I'd ask the experts for some help. For reference, I'm using the Macabacus merger model as a template with some slight modifications (no changes to the inputs, close, pro forma tabs).

The acquirer and target balance sheets are balancing, but the pro forma balance sheet doesn't in three of the last years. Time period is 2017 to 2023 (2021, 22, 23 is out of balance). I wiped out debt schedule assumptions, so debt is flat across all periods.

I know its tough to respond without looking at the model, but any initial thoughts on how to resolve? And perhaps more of a general question, if you have an issue like this.. do you typically start with the cash flow statement and check each line?

Thanks in advance, any help is much appreciated.

 
Best Response

Here is a good way to narrow it down.

First make sure your model has an imbalance checker.

Then freeze those cells. Begin altering your assumption values one by one in each field. If the amount of the imbalance increases or decreases in response to alterations in each assumption you know that one of the assumption's dependent cells is contributing to(or solely responsible for if you are lucky) the balance error.

I only had one model I wasn't able to fix that way and that was because after correcting all variable errors I found a small balance error that stayed flat no matter how drastically I changed assumptions in any direction. Since the balance error was under 0.05% (20 vs values in the area of 50,000) I ended up just plugging it.

 

Start with the last year that the balance sheet was balanced. Find the difference for each line item between the last year that was balanced and the first year that it isn't balanced. Each line item difference should be match the cash flows, if they don't that's basically where you need to look into.

I always hated balancing the balance sheet, that's probably because I don't have a super strong accounting background.

Good luck!

 

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