Financial Reporting Considerations for Divestitures

As you work through the divestitures process, there will be a number of changes to your financial statements.

These new financial statements – often referred to as RemainCo Financial Statements – will have to go through a data stripping process to remove information that pertains to the divested part of the business.

Your financial management team will need to determine if your financial statements should go through any structural changes as it relates to segments of the business. This will include your footnotes and management reporting evaluations.

There could also be impacts to financial reporting ratios imposed by your banks. This could be your debt covenant ratio or any matters influenced by the removal of the divested portion of the business. 

No two divestitures are alike and staying ahead of financial statement updates will help ensure you’re maintaining compliance with regulators and other significant stakeholders.

 

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