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One of management’s key roles is capital allocation. Investment professionals need to be able to judge how successful M&A activity has been relative to the other investment opportunities.
Given the size and significance of many M&A transactions, we encourage management to provide us with enough information to assess the value created through such activities. In the absence of a clear description of how value has been extracted from the significant sums invested in M&A, it is hard for investors to have confidence that the return on such investment is sufficient.
The CRUF would welcome more detailed disclosures following M&A activity, particularly in relation to liabilities assumed, fair value adjustments and assumptions, intangibles, and how acquisitions are managed. This would contribute to better understanding of the impact on long-term value.
Click the tabs below to reveal what CRUF would like to see for each of these current problems