Module V· Special Situations & Carve-OutsIntermediate
Question
How do you treat cross-border currency translation in a cross-border acquisition?
Answer
Translate the target's financials into the buyer's presentation currency using appropriate rates: balance sheet at closing rate, income statement often at average rate, and equity at historical rates. FX differences go to CTA / OCI. In valuation, separate operating performance from FX translation and hedge purchase price or financing exposure where relevant.