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In today’s dynamic environment, organizations are increasingly embracing complex financial instruments for structuring purchase considerations in M&A transactions, making investments, risk management and incentivising employees as part of their compensation. While these innovative instruments are crucial for bridging valuation gaps and aligning strategic objectives, they also introduce a distinct set of accounting and valuation challenges.
Our experts can help you navigate the valuation and accounting complexities to ensure fair and accurate reporting.
Our Complex Securities Solutions team has a wide range of experience, including, but not limited to, the following typical types of financial instruments:
Companies adhering to IFRS, Ind AS, US GAAP, or other major global accounting standards must report these instruments at their fair value. The complexity of the standards governing these instruments necessitates specialised knowledge for compliance and precision. Grant Thornton Bharat ensures that your firm’s financial reporting is not only compliant but also reflects the true value of your complex financial instruments.
ESOP and Convertible Instruments: We guided an Indian subsidiary of a Japanese conglomerate through the classification and accounting of Compulsorily Convertible Preference Shares (CCPS) under Ind AS 102. Our assessment of the fair value of services provided by an employee led to a graded approach in expense recognition, impacting the company’s equity.
Contingent Consideration: For a leading credit rating agency in India, we performed a Purchase Price Allocation for a BFSI software solution firm acquisition. This included a fair valuation of the Forward Contract Liability using Monte Carlo Simulation, crucial for future reporting and accounting.
Deals are becoming increasingly complex due to valuation gaps, and to align valuation expectations and strategic objectives, more transactions are now involving contingent consideration.