Question on Quickbooks

April 30, 2024
by a searcher from Swarthmore College in 120 Riverside Blvd, New York, NY 10069, USA
Hello! I have a very tactical question for the group. I am currently approaching the end of an acquisition process. We are about to begin legal due diligence. We're likely going to be structuring the deal as a stock purchase (using an F Reorg to get a step up in asset value). The seller currently maintains his books in QuickBooks. The books are a little messy today. There are expense categories reflecting expenses that the business incurred historically but will not have in the future. Also, there are a few equity accounts for assets that are no longer associated with the business.
Is it standard to take over a seller's QuickBooks account or start a new QuickBooks account from scratch?
In my mind, the latter seems cleaner. However, the former would save us a lot of time as we wouldn't have to set everything up from scratch and transfer historical data into the platform. I didn't know if there was a "best practice" here.
from University of Tennessee in Nashville, TN, USA
Issues surrounding adjusting entries should be addressed within the first month post-close and most will hopefully be identified during the diligence period. QB allows you to switch between Cash and Accrual presentation but you did not identify this as an issue pertinent to you. If it is, this article provides a general overview on how to and factors to consider https://www.paychex.com/articles/finance/cash-to-accrual-conversion.
Congratulations and good luck!
from Columbia University in New York, NY, USA