Accountancy Treatment of an MBO | AccountingWEB

Accountancy Treatment of an MBO

Hi All

I'm due to join a company that has just been acquired through a management buy out and am required to post the necessary treatment of the new structure but I am unsure of the specifics. The situation is as follows:

Details prior to take over:

The company had less than 10 shareholders that all had outstanding loans that were to be repaid back by the company

A share capital and share premium account

The company was/is running at a loss which is reflected in the P&L reserve

Details post takeover:

A single shareholder has purchased the shares of the other shareholders at an agreed premium

The purchase has been funded by an external loan and loan notes ill be issued

A new holdings company is to be created, that owns 100% of the trading company

As I have never been involved in an acquisition before I would really appreciate some advice on how I treat the above, I'm unsure of the technical treatment of this acquisition/MBO, including goodwill calculations, reserve accounts to create/use for both the existing and the new holdings company, accounting standards to adhere to etc

Any advice is most greatly welcomed, or if anyone could point me in the right direction of where I could find such advice/guidance?

Thanks in advance

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david5541 |

Hi David thanks for your

CIMA_Accountant |