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Clean Financial Separation

In: Divestitures and Spin-Offs

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  • Joseph Joy

    (Deloitte Consulting LLP)

Abstract

The need for carve-out financial statements is driven by a company’s decision to separate a part of its operations either through a sale to a third party, a spin-off to its current shareholders in a taxable or tax-free transaction, or a divestiture. Each of these types of transactions has unique financial statement requirements. In general, the financial statements will include a balance sheet, an income statement, a cash flow statement, and a statement of equity for a certain number of years based on how and by whom the financial statements will be used. This chapter will focus on the creation of carve-out financial statements used in connection with a spin-off that are compliant with regulations from the Securities and Exchange Commission (SEC) as well as accounting principles generally accepted in the United States (GAAP); however, we will also discuss considerations when full carve-out financial statements are not required.

Suggested Citation

  • Joseph Joy, 2018. "Clean Financial Separation," Management for Professionals, in: Divestitures and Spin-Offs, chapter 0, pages 67-82, Springer.
    • Handle: RePEc:spr:mgmchp:978-1-4939-7662-1_8
    DOI: 10.1007/978-1-4939-7662-1_8
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