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Navigating a Complex Change-in-Control Transaction

Navigating a Complex Change-in-Control Transaction

Following a significant investment by a new investor group—marked by amendments to existing debt and equity instruments—our manufacturing client underwent a change-in-control. This triggered the need to account for the transaction as a business combination. The timing coincided with turnover within the accounting department, creating an urgent need for outside expertise.

Challenge

Our client, a specialty global manufacturing company, was navigating unfamiliar terrain. The change-in-control, coupled with a recapitalization of debt and equity, introduced layers of complexity to their financial reporting requirements, and the internal team lacked experience with transactions of this scope.  

Accounting for the series of transactions under ASC 805 (Business Combinations) required detailed analysis, valuation work and model development. The urgency of the work was compounded by pressure facing the client to restructure the reporting framework and comply with new post-transaction standards—all while responding to the expectations of external auditors during a time of transition. 

Solution

We provided a structured and practical approach to untangle the complexity of the transaction, involving:  

  • Modular analysis: We broke the transaction down into discrete components, creating siloed technical memos for each. This modular approach made it easier for both management and auditors to digest and validate key elements. 
  • Model development: These workstreams were ultimately consolidated into a robust, auditable model that clearly bridged the pre- and post-transaction financial position. 
  • Cross-functional coordination: We partnered directly with the valuation firm to determine the fair value of net assets in the reorganized entity, ensuring consistency between valuation inputs and accounting treatment. 
  • Auditor liaison: Our team worked hand-in-hand with the client’s external auditors, proactively addressing questions and providing documentation that streamlined the audit process. 
  • Ongoing support: Beyond the initial transaction period, we stayed engaged through the issuance of the first set of post-transaction consolidated financials, offering continuity and expert guidance during a pivotal reporting phase. 

Outcome

With our support, the client was able to confidently navigate the post-transaction accounting landscape. Their financial statements were issued on time, aligned with all relevant requirements, and backed by documentation that satisfied both internal leadership and external auditors.  

Our involvement gave their internal team the clarity and support they needed during a period of heightened workload and complexity. We didn’t just address the core business combination transaction—we also advised on several adjacent projects that surfaced along the way, further cementing our role as a trusted partner. The client emerged with a clear accounting roadmap, a fully reconciled model bridging pre- and post-transaction positions, and a suite of technical memos supporting every significant aspect of the deal. 

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