Factors to Consider When Acquiring a Company

When acquiring a company whether a transaction or other event is a business, the definition, which requires assets acquired and liabilities assumed to be a business.

Acquisition Method when Acquiring a Company

An entity shall account for each consideration of acquiring a company combination using the acquisition method.

The acquisition method requires to:

  • identify the buyer;
  • determine the date of acquisition;
  • recognize and measure the identifiable assets acquired, liabilities assumed and any non-controlling interest in the acquire;
  • recognize and measure goodwill or gain from a bargain.

The main task when acquiring a company is to ensure the formal interaction between the capital market regulators responsible for the form and content of financial statements:

  • information by country, including requirements for the preparation of financial statements with links to country web resources, news, and analytical materials, as well as a description of the status and history of the transition to IFRS in that or another country;
  • the ability to personalize the interface by choosing topics of interest and viewing the selected information in a special format;
  • separate sections devoted to current topics – reporting in the field of sustainable development, integrated reporting, the global financial crisis, XBRL and accounting for financial transactions that meet the requirements of Islam, etc.
  • dates of upcoming IASB events, deadlines for comments to draft standards, etc.

What Factors to Consider when Acquiring a Company?

There are some important factors to consider when acquiring a company:

  1. This is a rather fashionable term, but at the same time, not everyone understands it correctly. KPI is not just an important indicator, it is the very digitized goal that needs to be achieved within a year. The number of KPIs should not be large, otherwise, the owner will not be able to focus his attention on the main goals. KPIs should be the basis for the formation of a system for assigning bonuses to managers, otherwise they are unlikely to want to achieve them.
  2. It is critical to understand that there is a big difference between the bottom line and the amount of money earned. At the end of the year, the profit figure may be quite significant, but at the same time, there may actually be no money. The find director must determine the reasons for this situation and bring them to the attention of the owner. From the report on the movement of money, you can understand the reason for the inflow of money (if CF is greater than zero) and the outflow of money (if CF is less than zero).
  3. The financial health analysis of a company is similar to biochemical analysis of human blood. In order to understand the causes of the disease, they take blood for analysis. And the analysis of financial health works on the same principle – it will show that the company needs to be healed in order to gain financial health. This procedure is called “diagnostics and monitoring of the company.” The owner should demand regular monitoring and diagnostics from the financial director in order to always keep his finger on the pulse of the financial health of his business.
  4. A distinctive feature of the system is the ability to adapt it to the corporate environment and project specifics. Using EVA capabilities and built-in platform capabilities, the project manager can develop his project area independently of other areas of the system. Most of the content can be renamed, modified, customized for certain types of projects.