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Private equity firm engages Solaris to prepare the Day 1 balance sheet, align ASC 805 policies, and deliver audit-ready schedules.
A private equity firm acquired a multi-brand specialty retailer and needed to establish the Day 1 opening balance sheet, and also assess accounting policy differences between the target and existing portfolio companies. Solaris was engaged to lead the technical accounting efforts under ASC 805 including valuation support coordination, policy alignment, and preparation of audit-ready schedules for the opening balance sheet.
The Challenge: Establishing Day 1 balances and reconciling accounting policy gaps
The acquired retailer maintained limited documentation of historical accounting policies, and many of its practices were inconsistent with U.S. GAAP including revenue recognition, inventory capitalization, and lease accounting. In addition, the short timeline between close and reporting deadlines created pressure to coordinate with valuation specialists, auditors, and internal stakeholders simultaneously.
The Solution: Driving audit-ready purchase accounting deliverables
Solaris led the opening balance sheet preparation which included developing schedules to reconcile historical books to Day 1 fair values, and coordinated closely with the valuation team to finalize intangible asset values. We prepared accounting memos documenting judgments and policies and worked with management to align legacy practices with the acquirer’s policies, especially around ASC 606, ASC 842, and inventory cost treatment. Our team ensured the results were packaged and reviewed in advance of audit walkthroughs.
"Solaris gave us clarity on a complex set of issues and helped us hit all our reporting targets without drama.” - CFO, Specialty Retail
The Impact: Clean audit and faster go-forward reporting
The client successfully completed the purchase accounting process with no audit adjustments. Policy alignment across the portfolio improved comparability for investor reporting, and the client gained a complete and supportable set of opening balances, enabling faster financial reporting in subsequent quarters.
Solution | M&A Support Services
Solaris led the preparation of the opening balance sheet and addressed legacy policy inconsistencies after the acquisition of a specialty retailer. Our work enabled clean audit delivery, portfolio comparability, and GAAP-aligned reporting going forward.
