Significant levels of accumulated cash have well-positioned many companies to pursue merger and acquisition activity. Potential acquirors and other transaction participants should be aware, in advance of entering into an acquisition transaction, of the Securities and Exchange Commission (SEC) reporting requirements for historical financial statements of the target business and pro forma financial information giving effect to the acquisition. These reporting requirements apply to registration statements filed by the acquiror as well as to the acquiror’s Current Report on Form 8-K reporting the consummation of the acquisition. As a matter of market practice, the financial reporting requirements applicable to registration statements also generally would be applied to an offering document for an offering exempt from SEC registration, including an offering of high-yield debt pursuant to Rule 144A.

Awareness of these requirements facilitates advance planning, including requiring cooperation from the seller and the seller’s accountants as part of the acquisition agreement. Advance planning and preparation is especially important for acquirors that intend to access the capital markets either to finance the acquisition or shortly after the closing of the acquisition.