New merger accounting rules that took affect Monday will have far-reaching implications for how deals are analyzed and structured. In this edition of Inside The Deal, Stamos Nicholas of Deloitte Financial Advisory Services tells Suzanne Stevens that FAS 141R requires that transaction costs, including earnouts and in-process R&D, must be expensed up-front and be charged directly to earnings rather than capitalized over time. To be sure these costs are properly accounted for, Nicholas says acquirers need to get not only corporate development and legal teams involved early in the deal cycle, but also financial and tax experts. Failing to do so could lead to some ugly surprises if those deals underperform projections.
Juergen Lasowski
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