Navigating Tariff Challenges in Accounting and Finance for M&A Transactions

In today's volatile trade environment, tariffs have become a significant factor impacting mergers and acquisitions from an accounting and finance perspective. For professionals in these fields, understanding and adapting to tariff-induced changes is critical to preserving deal value and managing risks effectively.

This article outlines five essential tasks for accounting and finance professionals dealing with tariffs in M&A transactions:

1. Enhanced Due Diligence: Investigate tariff effects on raw materials, supply chains, and customer dynamics to grasp potential shifts in cost and revenue.

2. Financial Modeling Adjustments: Update valuations to incorporate tariff risk, acknowledging that historical financials may no longer be reliable indicators.

3. Contractual Risk Allocation: Analyze MAE clauses and other conditions that allocate risk between buyer and seller amid tariff volatility.

4. Financial Reporting and Disclosure: Assess and disclose tariff-related liabilities and contingent risks to maintain transparent and compliant financial statements.

5. Collaboration with Legal on Warranty and Insurance: Coordinate on representations, warranties, and relevant insurance policies, focusing on tariff-related exclusions and indemnities.

By proactively addressing these areas, accounting and finance professionals can provide critical insight and assurance that supports strategic decision-making in today's challenging market.

How are you preparing your finance and accounting functions to address the complexities tariffs introduce in M&A? Join the conversation and connect with our experts to share your approach.