Understanding Financial Reporting Risks in Tech M&A Transactions

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Financial reporting risks can be a key consideration in tech M&A transactions. If the target’s financial reporting demonstrates a lower level of quality than the acquirer’s, challenges (and purchase price reductions or worse) may ensue.

Even when the target’s financial reporting is of a high quality, it is important not to overlook the degree of comparability between the acquirer’s and the target’s accounting standards and policies. Buyer CFOs will need to answer questions like: Does the target follow US GAAP or IFRS? Have the target’s financial statements been audited? Are the target’s revenue recognition policies the same as ours? This …read more

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