M&A, you say? Well, first things first: a ‘merger’ refers to when two or more companies join together to form a new company; acquisitions are when a company buys another company and incorporates it into itself. And accountants play an incredibly important part of these transactions.
M&A acronym busted…so what do the accountants do?
There’s a heck of a lot of preparation, checking and documentation that goes into these M&A processes and procedures. From an accounts point of view, companies looking into potential buys want to know exactly how healthy the books of their potential future partners or target purchase (the company they are considering investment in) are. It’s all part of overall risk assessment and risk management when it comes to making investments to try and establish if the merger or acquisition will be a worthwhile, financially safe (and ultimately lucrative!) move.
Lost & found in financial translation…
In a sense, accountants who work in M&A effectively act as financial translators and interpreters on global platforms as part of their remit. If a company based in the UK wishes to merge with or acquire a company based in another jurisdiction, then the two companies will have their accounts in order to meet differing Generally Accepted Accounting Principles (GAAP) standards. M&A accountants convert and explain the accounts information of a target company for their client to help them understand the financial position of their potential acquisition. Working knowledge of International Financial Reporting Standards (IFRS), as well as GAAP in other jurisdictions such as US GAAP and Singapore Financial Reporting Standards (SFRS) is therefore necessary.
From the target’s perspective, M&A accountants can assist in the preparation of financial explanations. M&A deals can become highly complex and involve different methods of accounting, such as push-down accounting, predecessor accounting and equity accounting, to ensure a successful merger or acquisition, so needless to say a real aptitude for mathematics and logic is a must!
Top communication skills are also part of the package as an M&A accountant. There more complicated things get, the more important it becomes to be able to put things into simple terms for clients.
These accountants tend to work in teams, and their biggest employers are professional services firms. Once qualified they can expect to earn upwards of £30,000 – and frequently much more than this!