Balance Sheet Adjustments In M&A Models

This question tests whether you understand how an acquisition changes the combined balance sheet and which accounts can be carried through versus which must be remeasured or removed. A strong answer requires thinking through purchase accounting, including the treatment of goodwill, asset revaluation, deferred taxes, target equity, and the financing sources used to fund the deal. Interviewers ask this because M&A modeling is less about plugging numbers and more about showing that you understand the accounting mechanics behind the transaction and how those mechanics affect the buyer’s balance sheet and valuation analysis.