SEC Proposes to Amend Financial Disclosures Regarding M&A Transactions

05.07.2019

By Steve Quinlivan, Bryan Pitko and Jaclyn Schroeder

The SEC has proposed rule amendments that revise required financial disclosure upon the acquisition and disposition of businesses in M&A transactions. The proposed changes would, among other things:

• Update the significance tests under these rules by revising the investment test and the income test, and conforming the significance threshold and tests for a disposed business
• Require the financial statements of the acquired business to cover up to the two most recent fiscal years rather than up to the three most recent fiscal years
• Permit disclosure of financial statements that omit certain expenses for certain carve-out transactions
• Clarify when financial statements and pro forma financial information are required
• No longer require separate acquired business financial statements once the business has been included in the registrant’s post-acquisition financial statements for a complete fiscal year
• Amend the pro forma financial information requirements to improve the content and relevance of such information; more specifically, these improvements would include disclosure of “Transaction Accounting Adjustments,” reflecting the accounting for the transaction, and “Management’s Adjustments,” reflecting reasonably estimable synergies and transaction effects

Our in-depth analysis on the SEC's proposed rules can be viewed here.

For more information on the SEC proposed rule amendments, please contact Steve Quinlivan, Bryan Pitko, Jaclyn Schroeder or the Stinson LLP attorney with whom you regularly work.

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Related Resources

SEC's Amendments to Financial Disclosures about Acquired and Disposed Businesses

Stinson's In-Depth Analysis on Dodd-Frank.com