Page 79 - DCOM205_ACCOUNTING_FOR_COMPANIES_II

Accounting for Companies – II

notes
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Case Study assistance in a client merger process
the challenge
Our client is a logistic services provider with one operational business based in Luxembourg.
One of its competitors was acquired during a group external growth operation and the
management decided to merge the two separate businesses into one single entity. PwC
Luxembourg was asked to provide Global Compliance Services (GCS) to help the client
manage all the administrative, tax, accounting and operational issues generated by the
merger, within a short time frame.
our approach
In close cooperation with our client, we prepared and validated an action plan including
key areas of focus and specific milestones. Our initial involvement was oriented on the
choice of the best structure to optimise the efficiency of the merger.
Strong efforts were also put in on tax and statutory compliance in order to ensure that
all regulatory and legal requirements (filing of statutory accounts, direct and indirect tax
returns) were completed before the merger was initiated. During this step, our experts
mainly provided advice on treatments and on the preparation of the statutory accounts
and tax returns (VAT and direct taxes).
Our GCS experts then greatly assisted our client in the preparation of the merger project, the
agendas of the different board meetings and extraordinary general meeting of shareholders
and coordinated the involvement of other external parties (notaries, auditors, lawyers,
banks,). We also assisted our client by providing specific help on the proper transfer of
the employees, suppliers and customer contracts. We helped our client manage all the
administrative tasks with the local authorities (social security, VAT, business licence,).
Moreover, our team was involved in the development and implementation of a common
accounting manual in order to optimise the existing financial processes.
the outcome
The dedicated GCS team helped the client reach its objective to go through a smooth
transition process with a high involvement of its team. Our GCS experts provided strong
coaching to the client’s team. At present, we keep providing specific services and coaching
on various accounting, tax and corporate secretarial matters.

Question
Discuss if the process of assistance was in sync with the outcome.
Source: http://www.pwc.lu/en/accounting/international-merger.jhtml

4.3 summary

l z The purchase consideration is that amount which is payable by the transferee company
(purchasing company) to the transferor company (vendor company) for the purchase of
business.

l z Purchase consideration may be paid in cash, shares, debentures or other securities.
l z As per Accounting Standard (AS)-14 “consideration is the aggregate of the shares and the
other securities issued and the payment made in the form of cash or other assets by the
transferee company to the shareholders of the transferor company.”

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