This NIF applies to all entities that issue financial statements under the terms established in the Series A of the NIF, being applicable to entities that make an acquisition of businesses.
According to NIF B-7, a business acquisition occurs when an entity acquires the net assets or a group of assets and liabilities that constitute a business, or acquires the common shares or equity interests of another entity, obtaining control of them.
Acquisition of a Business under NIF
The MFRS establishes that a business acquisition is a transaction through which an entity obtains control, directly or indirectly, over one or more businesses. An indirect acquisition may be made through a subsidiary. The ways of carrying out this acquisition include:
- Transfer of cash, cash equivalents or other assets: refers to a form of acquisition where the acquiring company pays for the business it wishes to acquire using cash, assets that can be easily converted into cash (such as short-term investments), or any other type of asset (e.g. property, inventory, etc.). This method is fairly straightforward as it involves an exchange of tangible value for control of the acquired business.
- Incurring liabilities: This means that the purchasing company assumes debts or financial obligations as part of the business acquisition process. Instead of paying for the purchase with cash or assets, the company agrees to assume the debts, loans or financial liabilities of the business it is acquiring or issues new debt to finance the purchase.
- Issuance of capital instruments: means that the purchasing company offers stock or other equity instruments, such as preferred stock, to the owners of the company it wants to acquire, rather than paying cash or assuming debt.
- Combination of the above options.
- Acquisition through a contract without consideration: This means that the acquiring company gains control of another company or business without any direct payment in the form of cash, assets or equity. In this case, the acquisition is made through a specific contract, agreement or provision that transfers control of the acquired business without the purchasing company having to offer anything in return at that time.
Additionally, an acquisition can be structured in a variety of ways, taking into account legal, tax or other aspects. These forms may include:
- Conversion of one or more businesses into subsidiaries of the acquiring entity or their merger: If Company A acquires Company B, it may decide to make Company B its subsidiary, retaining its structure and operations but under the control of Company A. Alternatively, they may choose to merge, resulting in a single entity that combines the assets, operations and resources of both companies.
- Transfer of net assets or equity interest in the acquired business to the acquiring entity: Company A acquires Company B. As part of the acquisition, Company B transfers all of its assets (property, cash, inventory) and liabilities (debts, accounts payable) to Company A, giving it full control over these net assets. Alternatively, Company B's owners can transfer their shares to Company A, becoming part of the acquiring company's equity.
- Transfer of net assets or interests of all entities involved to an entity created specifically for the acquisition: This transfer aims to centralize and optimize the management of the assets or interests involved by creating a new entity that assumes control of the transferred assets.
- Control acquired by a group of owners of the entities involved that are integrated into the new entity: When a group of owners acquires control in a new entity following the integration of several companies, they are in a position to directly influence the strategic and operational course of the entity.
Conclusions
NIF B-7 offers a detailed and flexible framework for business acquisitions, providing structured options that allow entities to manage these processes effectively. The different forms of acquisition and their corresponding accounting treatment seek to ensure transparency, operational efficiency and strategic alignment, key factors in the consolidation of successful businesses.
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