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How to prepare carve-out financial statements
On the Radar: Carve-out transactions
Carve-out transactions occur when larger parent entities pursue a sale, spin-off, IPO, or SPAC transaction involving a portion of their business. This edition of On the Radar covers considerations when preparing financial statements for nonpublic carve-out entities as there is no single set of comprehensive guidance on preparing carve-out financial statements.

Management often may need to use judgment and carefully plan ahead when preparing carve-out financial statements since such a process can be challenging. Considerations management should take into account when preparing carve-out financial statements include the following:
- Assembling the right team
- Materiality and evaluating misstatements
- Internal controls
- Supporting documentation
- Working with auditors
Form and content of the carve-out financial statements
The form and content of the carve-out financial statements depend on the needs or requirements of the users of the financial statements and any regulatory requirements applicable to the transaction for which the carve-out financial statements are being prepared. Accordingly, carve-out financial statements might be in the form of (1) public-entity financial statements subject to SEC requirements, (2) nonpublic-entity financial statements to which certain US GAAP presentation and disclosure requirements do not apply and for which reporting alternatives developed by the Private Company Council and subsequently endorsed by FASB may be elected, and (3) special-purpose financial information that a user may ask for in a specific form or for it to be prepared in accordance with another comprehensive basis of accounting.
Continue your carve-out transactions learning
Deloitte’s Roadmap Carve-out Transactions provides a comprehensive discussion of key factors for entities to consider as they prepare their carve-out financial statements.

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Michael Morrissey
Partner
Deloitte & Touche LLP
+1 203 761 3630
Ignacio Perez
Managing Director
Deloitte & Touche LLP
+1 203 761 3379
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