Module V· Special Situations & Carve-OutsIntermediate
Question
What is a reverse merger, and how does the accounting differ from a standard merger?
Answer
A reverse merger occurs when the legal acquirer is not the accounting acquirer. The accounting acquirer is the party that obtains control under accounting rules, often based on ownership, board control, management, and economic substance. Accounting follows the accounting acquirer's perspective, so legal form can differ from financial reporting presentation.