If you come across a small private company that only does tax accounting instead of GAAP for monthly reporting, but only does annual journal entries at December for year end GAAP reporting purposes, is there a way to normalize the monthly amounts? Seems like we’d only be able to report annual GAAP numbers rather than monthly. Any other risk considerations to call out for a potential buyer?

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If they have good data backup support for year end top side entries, it shouldn’t be hard to normalize on a monthly basis adopting similar methodologies applied at year end..

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Agree. I feel like this is a super common procedure. I’m in MM and perform accrual normalizations on pretty much every single deal.

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You do your best to come to a view of estimated accrual basis numbers monthly for the areas that matter and put a big disclaimer on it being an estimate

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