Taking a quick glance through the guidance, however in most cases it speaks from the perspective of the acquirer (see below). What does the acquiree do with the deal fees it's incurred? Are they simply recorded directly to equity as in a funding/issuance of equity or does the answer require a read through the agreement to be definitive? Acquisition-Related Costs An acquirer in a business combination typically incurs acquisition-related costs, such as finder’s fees, advisory, legal,
Acquiree's treatment of deal fees.
Answers
They are expensed as incurred. They will end up in retained earnings through the posting of the P&L.
If you are in a private company, you would reflect this as an add back to EBITDA as one time costs.
Is this for a US or European transaction?
US Co acquired by a European parent...
Recommend tracking them in a sep expense account as well, so it makes it easier for the add-back as Patrick mentioned. Or put it below the EBITDA line if that is a reporting option for your company.
I would always read the deal documents. That said, if the buyer agreed to pay the acquiree's costs, those costs should have been accrued at the acquisition date. Assuming purchase accounting was applied and pushed down into the acquiree's financial statements, the additional liabilities assumed would increase goodwill.