We are pleased to present the 2023 edition of Carve-Out Financial Statements. This Roadmap discusses key factors for entities to consider as they prepare their carve-out financial statements.
“Carve-out financial statements” is a general term used to describe financial statements derived from the financial statements of a larger parent entity. Such statements are often required when a parent entity wishes to pursue a sale, spin-off, initial public offering (IPO), or special-purpose acquisition company (SPAC) transaction involving a portion of the parent entity. In addition, they are necessary in various types of transactions as a means of reflecting the portion of a parent entity’s balances and activities that is being “carved out.” Certain SEC staff guidance addresses some elements of carve-out financial statements (e.g., when to include them in an SEC filing), and parent entities often refer to the SEC staff’s guidance on preparing financial statements for nonpublic carve-out entities. However, there is no single source of comprehensive guidance on preparing carve-out financial statements.
The 2023 edition of the Roadmap includes updated and expanded guidance. Appendix C highlights substantive changes made to the Roadmap since issuance of the 2022 edition.
This Roadmap is intended to be a helpful guide but is not a substitute for consulting with professional advisers on complex accounting questions and transactions. We hope that you will find this publication useful in dealing with carve-out financial statements.