A recent Deloitte poll found that an increasing number of executives are rethinking their deal strategy in light of FASB ASC 805, Business Combinations, formerly Statement no. 141(R).
Of executives polled, 44.3% said they are rethinking their strategy or that the standard would otherwise affect their deal strategy or planned deal activity, up from 40.3% in February 2008, soon after the standard took effect.
When asked what was their greatest concern about implementing ASC 805, 29.8% of executives said it was the shortened time frame within which good fair value estimates subsequent to the acquisition are needed. Other major concerns included increased likelihood of company earnings volatility for several years tied to new rules for fair value estimation (22%).
More than 2,025 executives from the technology, media and telecommunications; financial services; consumer and industrial products; life sciences and health care; and energy and resources industries responded to the survey during a March webcast, titled “Valuation Under SFAS 141R: What Implementation Lessons Are We Learning?” Listen to the webcast archive at tinyurl.com/mpj452.
Source: Deloitte Financial Advisory Services LLP and Deloitte Services LP, deloitte.com.