Calendarisation And Stub Periods

Question 1

What’s the purpose of calendarization in a merger model?

Answer 1

Need to make sure buyer and seller use same fiscal years post transactions. Normally change the seller’s financial statements to match the buyer’s.
- also may need to create a stub period between date when deal closes to the end of buyer’s current financial year

Question 2

Let’s say that the buyer’s fiscal year ends on December 31, the seller’s fiscal year ends on June 30, and the transaction closes on September 30. How would you create a merger model for this scenario?

Answer 2

Create financial statements a for both buyer and seller from sep 30 - dec 31, combine all statements.

Question 3

What if deal closes on a more random date

Answer 3

Try roll forward statements by averaging between easy dates.
- bare work
So usually assume a cleaner close date in merger models unless you need 100% precision for some reason