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Chapter 2 — Business Acquisitions

2.2 Identifying a Probable Business Acquisition

2.2 Identifying a Probable Business Acquisition

As discussed in Sections 2.4 and 3.4, for registration statements and in certain proxy statements, Rules 3-05 and 3-14, respectively, may require (1) presentation of financial statements and (2) pro forma financial information for a business that has not yet been acquired but whose acquisition is probable. While the term “probable” is not defined in Rule 3-05 or Rule 3-14, the SEC offers the following guidance in Codified Financial Reporting Release Section 506.02(c)(ii):
Guidance as to when consummation of a transaction is probable cannot be given because such a determination is dependent upon the facts and circumstances. In essence, however, consummation of a transaction is considered to be probable whenever the registrants’ financial statements alone would not provide investors with adequate financial information with which to make an investment decision.