RESTRUCTURING AND ACQUISITIONS
Restructuring and acquisitions: accounting and consolidation impacts
A merger, a partial asset contribution or an acquisition changes a group's structure and its accounts. We analyse and handle the accounting and consolidation impacts of these transactions, in coordination with the transaction's lawyers and advisers.
What the engagement covers
We cover the accounting side of structural transactions, before and after completion. Upstream, we measure the transaction's effects on the statutory accounts, the consolidated accounts and, where relevant, the tax consolidation group. Downstream, we reflect it in the accounts: entries, contribution values, changes in scope, purchase price allocation. We handle internal reorganisations as well as acquisitions, without stepping into the role of the transaction's legal advisers.
- Mergers, universal transfers of assets and liabilities (TUP) and partial asset contributions
- Contribution values and accounting treatment of the transaction
- Entries into and exits from the scope of consolidation
- Purchase price allocation and goodwill
- Effects on the tax consolidation group: entry, exit, neutralisations
- Summary note on accounting impacts, for management and the statutory auditors
Who it is for, and when
Groups reorganising their legal structure (simplification, combining businesses, creating subsidiaries), groups making an acquisition that must be reflected in their consolidated accounts, or groups selling a subsidiary. We also work at the request of the transaction's lawyers or advisers, to quantify and document the accounting side. It pays to involve us early: some structural choices have accounting effects that cannot be corrected afterwards.
How we work
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Analysis of the project and the options considered, with the transaction's advisers.
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Measurement of impacts: accounting, consolidation and tax.
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Accounting treatment: entries, contribution values, effective date.
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Consolidation: change in scope and, for an acquisition, purchase price allocation.
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Documentation for management and the statutory auditors.
FAQ
At what value is an internal restructuring recorded?
In the statutory accounts, French GAAP (ANC regulation 2014-03) requires either the carrying amount or the fair value of the contributed assets, depending on who controls the companies involved and the direction of the transaction. Between companies under common control, the carrying amount generally applies. This choice directly affects the accounts and should be analysed before the transaction.
What is a purchase price allocation?
When a company is acquired, its identifiable assets and liabilities are measured at fair value in the consolidated accounts. The difference between the price paid and that value is goodwill. Under IFRS (IFRS 3) and French GAAP alike, the allocation may be adjusted for a limited period after the acquisition.
Do you replace the lawyer?
No. The legal side of the transaction (merger or contribution agreement, formalities, tax advice) is the lawyers' remit. We handle the accounting and consolidation side, in coordination with them, and provide the figures they need.