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Main changes that arise in the financial statements upon acquisition are:

* Profit & loss statement: adding the main operating line items of the target to the acquirer (e.g. revenue, EBITDA). Adding any synergies such as revenue increases, cost savings, cost increases e.g. restructuring costs. Adding increased financing costs arising for example through an increase in debt taken on fund the acquisition; * Balance sheet: adding the main line items of the target to the acquirer. Adjusting for finance taken on to fund the acquisition e.g. an increase in debt. Adding "goodwill" that arises on acquisition. Goodwill is a type of intangible asset. It is a non cash accounting entry on the balance sheet. It represents the surplus of the price paid by the acquirer over the target's net assets. Net assets equals the difference between total assets and liabilities on the balance sheet. It is also known as shareholders' funds or shareholders' equity. * Cash flow: adding the cash impact of the adjustments above. See http://financial-training-company.blogspot.com/2009/08/financial-modelling-in-excel-how-to.html for more detail. Posted by www.financialtrainingassociates.com

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