In my humble opinion....

In mergers and acquisitions, the analysis of tangible and intangible assets plays a pivotal role in assessing the value and potential risks associated with a transaction. Tangible assets, such as property, plant, and equipment (PPE), provide a tangible foundation for the business, while intangible assets, including intellectual property, brand reputation, and customer relationships, often represent the true drivers of value. Tangible Assets Tangible assets include physical assets that hold intrinsic value and contribute to a company's operations. These assets include property, plant, equipment (PPE), machinery, land, office buildings, etc.. Tangible assets are typically recorded on the balance sheet at their historical cost and may be subject to depreciation over their useful lives. They are initially recorded at cost, which includes all expenditures necessary to acquire and prepare the asset for its intended use. Subsequently, these assets are depreciated over their estimated usef...

Companies have their distinct revenue recognition policies and, in the M&A space this can present quite a challenge especially if they are in different jurisdictions. Aligning their individual revenue recognition policies can prove to be a time-consuming task. This will require a thorough understanding of the companies’ practices, applicable accounting standards and local laws; and can be a tight rope to walk since any change in revenue recognition impacts financial metrics and can make it challenging for stakeholders to compare performance – historical and post-merger. IASB’s (International accounting standard board) international accounting standards and it adoption by an increasing number of accounting boards has been pivotal in enhancing comparability and reliability of financial statements across different jurisdictions. However, the impact of local best practices and laws may need to be determined. Revenue recognition is an accounting principle which defines when and how a bu...

  The ultimate goal of an M&A transaction is to determine the fair value of a business to be acquired. Financial due diligence is a critical step in investigating financial health of a company with a view to empower buyers to make an informed decision. Financial due diligence entails the investigation of the financial health of the company by meticulously scrutinizing their historical and current financial statements to ascertain their future forecasts and identify any potential risks not readily apparent in the financial statements for the buyer’s perusal, often advising remedial measures to avoid future regulatory or cost implications. There are, in the normal course of business, two types of M&A transactions: 1) Buy-side – The aim of financial due diligence from a buyer’s perspective is to determine the robustness of the target’s financial health and its prospects as you’d want it to be. It is perhaps the first step to a peaceful M&A transaction journey for the b...