NYT DealBook, January 31, 2008:
New accounting rules for mergers and acquisitions are likely to have some far-reaching consequences for what such deals cost and how they get done, Compliance Week reports.
One of the most significant changes relates to transaction fees, including fees for investment bankers, attorneys and accountants. Under the new standard, those fees will generally need to be expensed when they are incurred. (Under the current rules, such fees are capitalized and amortized over time.)
Because so much deal-related work happens before a transaction is announced, companies may need to worry about tipping off the markets about a potential deal when those expenses turn up.
The new rule, set to take effect in fiscal 2009 for calendar year-end companies, could also bring more attention to the size of lawyers’ and brokers’ fees.
“Anytime you have something hitting the bottom line, it’s going to lead to more attention,” David Zagore, a partner at Squire, Sanders & Dempsey, told Compliance Week.
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