Imagine this: Your company is in the middle of a transaction, expected to close before year-end. You’ve been working with an array of M&A specialists—investment bankers, attorneys, tax accountants, due diligence teams, valuation experts, and a CPA experienced in business combinations.

Mergers and acquisitions (M&A) are transformational moments in a company’s lifecycle, offering opportunities for growth, expansion, and increased market share. However, they also introduce complex financial reporting, tax, and regulatory challenges.

From a financial reporting standpoint, early CPA involvement is critical to ensuring a smooth post-transaction transition. Too often, the deal closes before accounting is finalized—only for an audit requirement to surface afterward. Let’s take a closer look at the key areas where CPAs add value in an M&A transaction.

As providers of business advisory services with experience helping guide organizations through a multitude of mergers and acquisitions along with other business transactions, we’ve seen firsthand how early engagement of CPAs enables technical accounting experts to meticulously review all financial aspects and address them in an efficient manner, from purchase price allocation to compliance with relevant accounting standards.

There are several key components of the M&A transaction accounting process where it can be prudent to involve a CPA:

Involving CPAs early in the M&A process, particularly to address the components explored above, can offer organizations several advantages:

For organizations exploring or in the middle of mergers and acquisitions, building your team of M&A advisors should not be an afterthought, but rather a strategic decision made at the outset. By integrating CPAs into your M&A team early, you can navigate the financial and regulatory complexities with greater confidence, ensuring a smoother transition and a stronger post-merger foundation. At the end of the day, it’s helpful to approach the technical accounting perspective as a strategic asset that can significantly influence the success of your M&A transaction.

If your organization is planning or actively engaged in an M&A transaction, our experienced CPAs can help you navigate financial complexities with confidence. Contact Haskell & White today to learn how our M&A advisory services can support your success.

Engaging in a merger or acquisition (M&A) can help your business grow, but it also requires a careful review of all the considerations at play. All parties must perform due diligence and understand the strengths and weaknesses of their intended partners or acquisition targets before entering into a transaction.

A robust due diligence process involves more than assessing the reasonableness of the sales price. It can also help verify the seller’s disclosures, confirm the target’s strategic fit, and ensure compliance with legal and regulatory frameworks — both before and after the deal closes. As M&A advisory services providers, we’ve walked many clients through this process. Here’s an overview of some key phases of due diligence.

Before the due diligence process begins, make sure to establish clear objectives, The work during this phase should include a preliminary assessment of the target’s market position and financial statements, as well as the expected benefits of the transaction. You should also identify the inherent risks of the transaction and document how due diligence efforts will verify, measure, and mitigate the buyer’s potential exposure to these risks.

The primary focus during this step is evaluating the target company’s financial statements, tax returns, legal documents, and financing structure. Additionally, scrutinize the contingent liabilities, off-balance-sheet items, and the overall quality of the company’s earnings. The M&A team should also analyze budgets and forecasts, especially if management prepared them specifically for the M&A transaction. Finally, interviews with key personnel and frontline employees can help a prospective buyer fully understand the company’s operations, culture, and value. Whether you engage external M&A advisory services or work with your current team, a thorough due diligence process is imperative to the ultimate success of the transaction.

Information gathered during due diligence, typically through a quality of earnings (QoE) report can help the parties develop the terms of the proposed transaction. For example, M&A teams can help identify and validate adjustments to EBITDA and assess the measurement of net working capital. Additionally, the M&A team unearths issues — like excessive customer turnover, significant related-party transactions, compliance matters — could warrant a lower offer price or an earnout provision (where a portion of the purchase price is contingent on whether the company meets future financial benchmarks). Likewise, cultural problems such as employee resistance to the deal or incongruence with the existing management team’s long-term vision could cause a buyer to revise the terms or walk away from the deal altogether.

Comprehensive financial due diligence is the cornerstone of a successful M&A transaction. If you’re thinking about merging with a competitor or buying another company, contact our expert business advisory services team to help you gather the information needed to minimize the risks and maximize the benefits of a proposed transaction. Our CPAs specializing in M&A advisory services will understand your ultimate objective in buying a company or merging and help ensure the decisions you make during the M&A transaction process work towards your larger business goals.

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