Important things business owners need to know about mergers and acquisition

In today's blog, Yas Aloosy shares three important things business owners need to be aware of about mergers and acquisitions.

1) A debit does not always equal a credit.

In other words, you may not always have to pay the same amount as what you received from a particular transaction. In many cases, this results from a one-time chargeback or "reversal" that occurs either after a sale has been made or when someone pays cash for an item and then returns it later. Remember to keep records of transactions in your financial statements to calculate a company's book value accurately.

2) The proper use of consolidating and non-consolidating accounts is key.

When a company acquires another company, it needs to record journal entries to consolidate the two companies' assets and liabilities together from the day of the acquisition and eliminate any intercompany items. This means that all non-consolidated accounts must be eliminated. You can't cherry pick which non-consolidated accounts to keep and ignore certain ones, so make sure you take the necessary steps to consolidate your companies together when it's time to merge them.

3) It's important to be thorough when writing and implementing your merger and acquisition plan.

Merger and acquisition plans can get complex in the planning stages, so it's important that you follow through with them when they're put into action. This means you must track all costs involved in the merger or acquisition itself. Costs such as legal fees, accounting costs, marketing expenses and more must be properly documented to refer to them later. You can't guess these numbers, or you could be accused of fraud if something were to go wrong with the merger or acquisition, Yas Aloosy adds.