After completing its first acquisition, a private equity portfolio company engaged DLC to perform opening balance sheet work and other post-transaction requirements. The client’s strategy for growth relied on continued expansion and establishing flexible processes that would be utilized across future acquisitions
After a recent acquisition, a lack of available resources, and limited knowledge of accounting standards, the client was faced with challenges in creating the opening balance sheet.
As part of their post-acquisition requirements, the client also needed to conduct a fair value assessment of the newly acquired company’s fixed and intangible assets and assess their current accounting practices relative to US GAAP to ensure compliance – all of which their team had limited experience with.
After reviewing the sale purchase agreement, due diligence report, and initial closing balance sheet for the newly acquired entity, DLC created an Excel-based revenue recognition model that tracked project revenue daily and in accordance with accounting standards and best practices.
The DLC team also performed the opening balance sheet work, including valuation of fixed and intangible assets (inventory, computer and office equipment, furniture and non-compete covenants), preparing purchase accounting journal entries, and determining the necessary reserves and allowance for doubtful accounts to be accurately recognized.
After engaging DLC, the new subsidiary company is now closing its books within 8 days on an accrual accounting basis, accounting for revenue in accordance with US GAAP standards, and conforming to the parent company’s format and guidelines.
In addition, the client now has an audit-ready opening balance sheet and adequate supporting schedules for its financial statements, making them well equipped to go through their first ever financial statement audit.
- Compliance issues
- Lack of resources & knowledge
- No opening balance sheet, impacting post-acquisition success
- Compliance with US GAAP
- Streamlined process for balance sheet creation & revenue recognition
- Accurate financial statements