-
Why Grant Thornton
Whether you’re growing in one market or many, looking to operate more effectively, managing risk and regulation, or realising stakeholder value, our firms can help.
-
Culture and experience
Grant Thornton’s culture is one of our most valuable assets and has steered us in the right direction for more than 100 years.
-
Global scale and capability
Beyond global scale, we embrace what makes each market unique, local understanding on a global scale.
-
Join our network
In a world that wants more options for high quality services, we differentiate in the market to grow sustainably in today’s rapidly changing environment.
-
Leadership governance and quality
Grant Thornton International Ltd acts as the coordinating entity for member firms in the network with a focus on areas such as strategy, risk, quality monitoring and brand.
-
Africa
24 member firms supporting your business.
-
Americas
31 member firms, covering 44 markets and over 20,000 people.
-
Asia-Pacific
19 member firms with nearly 25,000 people to support you.
-
Europe
53 member firms supporting your business.
-
Middle East
8 member firms supporting your business.
-
Business consulting services
Our business consulting services can help you improve your operational performance and productivity, adding value throughout your growth life cycle.
-
Business process solutions
We can help you identify, understand and manage potential risks to safeguard your business and comply with regulatory requirements.
-
Business risk services
The relationship between a company and its auditor has changed. Organisations must understand and manage risk and seek an appropriate balance between risk and opportunities.
-
Cybersecurity
As organisations become increasingly dependent on digital technology, the opportunities for cyber criminals continue to grow.
-
Forensic services
At Grant Thornton, we have a wealth of knowledge in forensic services and can support you with issues such as dispute resolution, fraud and insurance claims.
-
Mergers and acquisitions
We work with entrepreneurial businesses in the mid-market to help them assess the true commercial potential of their planned acquisition and understand how the purchase might serve their longer-term strategic goals.
-
Recovery and reorganisation
Workable solutions to maximise your value and deliver sustainable recovery.
-
Transactional advisory services
We can support you throughout the transaction process – helping achieve the best possible outcome at the point of the transaction and in the longer term.
-
Valuations
We provide a wide range of services to recovery and reorganisation professionals, companies and their stakeholders.
-
Sustainability advisory
We can assist you with a variety of sustainability advice depending on your needs, ranging from initial strategy development, reporting and compliance support, through to carbon measurement and management.
-
IFRS
At Grant Thornton, our IFRS advisers can help you navigate the complexity of financial reporting from IFRS 1 to IFRS 17 and IAS 1 to IAS 41.
-
Audit quality monitoring
Having a robust process of quality control is one of the most effective ways to guarantee we deliver high-quality services to our clients.
-
Global audit technology
Our global assurance technology platform provides the ability to conduct client acceptance, consultations and all assurance and other attestation engagements.
-
Sustainability assurance
Our sustainability assurance services are based on our global network of specialists, helping you make more efficient decisions for the good of your organisation.
-
Corporate and business tax
Our trusted teams can prepare corporate tax files and ruling requests, support you with deferrals, accounting procedures and legitimate tax benefits.
-
Direct international tax
Our teams have in-depth knowledge of the relationship between domestic and international tax laws.
-
Global mobility services
Through our global organisation of member firms, we support both companies and individuals, providing insightful solutions to minimise the tax burden for both parties.
-
Indirect international tax
Using our finely tuned local knowledge, teams from our global organisation of member firms help you understand and comply with often complex and time-consuming regulations.
-
Transfer pricing
The laws surrounding transfer pricing are becoming ever more complex, as tax affairs of multinational companies are facing scrutiny from media, regulators and the public
-
Africa tax desk
A differentiating solution adapted to the context of your investments in Africa.
-
Sustainability tax
Through our sustainability tax advisory services, we can advise how environmental taxes, incentives, and obligations can impact your progress, requiring alignment with governmental and legislative pressures.
-
Banking Holding banking to account: the real diversity and inclusion pictureWe explore how the banking sector can continue to attract, retain and nurture women to build a more diverse and inclusive future.
-
Sustainability From voluntary to mandatory ESG: How banks can future-proof their operationsAs we move from voluntary ESG initiatives to mandatory legislation, we explore what the banking sector needs to prioritise.
-
IFRS IFRS 9 - Audit of Expected Credit LossesGPPC releases The Auditor’s response to the risks of material misstatement posed by estimates of expected credit losses under IFRS 9
-
growthiQ Steering your company to long-term successHistory has something important to tell us about the difficulties of steering a business to long-term success – through seismic shifts in technology, consumer demands and product development. With that in mind it’s unsurprising that over half the world’s largest companies in the early 1900s had shut their doors by the late 1990s. Some, however, have endured.
-
International Financial Reporting Standards Implementation of IFRS 17 ‘Insurance Contracts’The auditor’s response to the risks of material misstatement arising from estimates made in applying IFRS 17 ‘Insurance Contracts’
-
IFRS Get ready for IFRS 17After twenty years of development the IASB has published IFRS 17 ‘Insurance Contracts’, find out more.
-
Global business pulse - industry analysis Mid-market recovery spreads to more industriesThe index results for 13 key industries of the mid-market reveals a very uneven recovery from COVID-19
-
Global business pulse - industry analysis A very uneven recovery across industriesThe index results for 13 key industries of the mid-market reveals a very uneven recovery from COVID-19
-
Global business pulse - Sector analysis Clear patterns of damage from COVID-19 across the industriesThe index results for 12 key sectors of the mid-market reveal just how much or little the various parts of the economy were impacted by COVID-19.
-
Not for profit Mission: possible – putting impact at the heart of charityGlobal charitable continues to decline and charity leaders are increasingly looking at their own unique impact journey.
-
Access to finance Raise finance to invest in changePrepare your business to raise finance to invest in change.
-
Private equity firms Private equity in the mid-market: reshaping strategies for 2021When the global COVID-19 pandemic stormed across the globe in early 2020, the private equity sector was hit hard but deals are coming back to the market.
-
Mid-market businesses Getting ready for private equity investmentOur specialists explore how private equity firms are now working with their portfolios and how the mid-market can benefit from investment.
-
Mid-market businesses Myth-busting private equityNervous about partnering with Private Equity? We explore some of the common myths we come across when speaking to mid-market businesses about PE investment.
-
Public sector Helping build the government of tomorrow, todayLearn about the Grant Thornton US public sector team.
-
Global business pulse - industry analysis Mid-market recovery spreads to more industriesThe index results for 13 key industries of the mid-market reveals a very uneven recovery from COVID-19
-
Global business pulse - industry analysis A very uneven recovery across industriesThe index results for 13 key industries of the mid-market reveals a very uneven recovery from COVID-19
-
Global business pulse - Sector analysis Clear patterns of damage from COVID-19 across the industriesThe index results for 12 key sectors of the mid-market reveal just how much or little the various parts of the economy were impacted by COVID-19.
-
Industries European Real Estate PodcastJessica Patel, Tax Partner at Grant Thornton UK speaks with tax partners and directors across the network to share their insights on the real estate market and some of the challenges.
-
Industries European Real Estate PodcastJessica Patel, Tax Partner at Grant Thornton UK speaks with tax partners and directors across the network to share their insights on the real estate market and some of the challenges.
-
Global business pulse - industry analysis Mid-market recovery spreads to more industriesThe index results for 13 key industries of the mid-market reveals a very uneven recovery from COVID-19
-
Global business pulse - industry analysis A very uneven recovery across industriesThe index results for 13 key industries of the mid-market reveals a very uneven recovery from COVID-19
-
-
Global business pulse - industry analysis Mid-market recovery spreads to more industriesThe index results for 13 key industries of the mid-market reveals a very uneven recovery from COVID-19
-
Global business pulse - industry analysis A very uneven recovery across industriesThe index results for 13 key industries of the mid-market reveals a very uneven recovery from COVID-19
-
Retail How retail is positioning for successCOVID-19 provided some hard lessons for the retail industry. It is time to turn those into sustainable and well executed growth strategies in 2021.
-
Telecoms Can tech and telecom leverage economic headwindsAs most businesses brace for an economic downturn, tech and telecom could see new prospects. But, to turn the headwinds to your advantage, you need to find your unique opportunities and risks.
-
Technology Mid-market tech companies lead the way on diversity and inclusionWe explore how the mid-market tech sector can continue to build and nurture a culture that’s increasingly more diverse and inclusive for women.
-
Tax Resetting global tax rules after the pandemicBusinesses are seeing rising challenges, and finance heads are dealing with a range of new measures. To say the next 12 months are critical for businesses is an understatement.
-
TECHNOLOGY International tax reform: the potential impact on the technology industryIn this article, we’ve summarised key elements of the global tax reform proposals, their potential impact on technology industry and advice from our digital tax specialists on what technology companies can do to prepare.
-
Telecoms Can tech and telecom leverage economic headwindsAs most businesses brace for an economic downturn, tech and telecom could see new prospects. But, to turn the headwinds to your advantage, you need to find your unique opportunities and risks.
-
TMT TMT industry: Fully charged or on standby?Our research revealed five key trends that resonated with Technology, Media and Telecoms (TMT) industry leaders around the world. We asked a panel of our experts from UK, US, India Ireland and Germany, to give us their reaction to the findings.
-
Cybersecurity One size fits nothingTechnology companies must adopt a new approach to digital risk: those that successfully develop a reputation for digital trust by demonstrating an unwavering commitment to cyber security and data privacy will be able to carve out a competitive advantage.
-
Technology, media & telecommunications Why it’s time for a 5G reality checkFigures suggest the mobile sector is maturing. While data usage continues to soar, mobile revenues are expected to flatten out over the next few years.
-
International business Mid-market businesses lifted by rising tide of optimismOptimism among global mid-market business leaders rose to 67% in the first half of this year and they are markedly more optimistic about their prospects with global optimism having increased by 8%.
-
Global business pulse - industry analysis Mid-market recovery spreads to more industriesThe index results for 13 key industries of the mid-market reveals a very uneven recovery from COVID-19
-
Hotels COVID-19: Checking in with the hotel industry one year onCOVID-19 provided some hard lessons for the hotel sector. It is time to turn those into sustainable and well executed growth strategies.
-
Global business pulse - industry analysis A very uneven recovery across industriesThe index results for 13 key industries of the mid-market reveals a very uneven recovery from COVID-19
- By topic
-
Women in Business 2024
2024 marks the 20th year of monitoring and measuring the proportion of women occupying senior management roles around the world.
-
COP28: Mid-market firms should seize the opportunity from adaption and innovation
COP28 was the first time there has been a global stocktake on progress against the Paris Agreement.
-
Scanning the horizon: Mid-market sets sights on global trade growth
The latest International Business Report (IBR) data shows that mid-market businesses have high expectations for global trade.
-
Mid-market sees business optimism reach record high
Grant Thornton's latest International Business Report (IBR) sees optimism among mid-market business leaders reach a record high with 74% optimistic about the outlook for their economy over the next 12 months.
-
Women in tech: A pathway to gender balance in top tech roles
Grant Thornton’s 2024 Women in Business data suggests we are far from achieving parity within the mid-market technology sector.
-
Women in leadership: a pathway to better performance
What makes the benefits of gender parity compelling is the impact it can have on commercial performance.
-
Women in Business 2024
2024 marks the 20th year of monitoring and measuring the proportion of women occupying senior management roles around the world.
-
Women in business: Regional picture
We saw an increase in the percentage of senior management roles held by women, on a global level, but there are some significant regional and country variations.
-
Pathways to Parity: Leading the way
To push towards parity of senior management roles held by women, who leads within an organisation is vital.
-
Generating real change with a long-term focus
The most successful strategy to achieve parity of women in senior management is one which stands alone, independent of an ESG strategy.
-
People at the heart of great business
Businesses have started to put guidelines and incentives in place, focused on driving employees back to the office.
-
Focusing and developing a solid strategy around diversity, equity and inclusion
Grant Thornton Greece is pioneering a growing set of diversity, equity and inclusion (DE&I) initiatives that centre around three strategic pillars.
-
Ten considerations for preparing TCFD climate-related financial disclosures
Insights for organisations preparing to implement the International Sustainability Standards Board (ISSB)’s Standards.
-
COP28
COP28 was the first time there has been a global stocktake on progress against the Paris Agreement.
-
Transition Plan Taskforce publishes its final disclosure framework
As organisations in the private sector make commitments and plans to reach net zero, there's a growing need for stakeholders to be able to assess the credibility of their transition plans.
-
Promoting ESG excellence through tax
ESG considerations have never been more important for an organisation’s long-term success, but how can tax be used to add value to an ESG agenda?
-
International business: Mid-market growth and expansion
The mid-market looks to international business opportunities for growth.
-
Top five constraints to international business in the mid-market
Top five major constraints that are testing the mid-market’s ability to grow their businesses internationally.
-
Brand and international marketing – breaking global barriers
Brand has been identified as a key driver of mid-market success when looking to grow and develop international business.
-
The key to international business: Investing in people
How can recruitment and retention help grow international business?
-
Building resilience in international business
Evolving supply chains and trade patterns amid ongoing global uncertainty.
-
IFRS Alerts
IFRS Alerts covering the latest changes published by the International Accounting Standards Board (IASB).
-
Example Financial Statements
General guidance for preparers of financial statements that supports the commitment to high quality, consistent application of IFRS.
-
Insights into IFRS 2
Insights into IFRS 2 summarises the key areas of the Standard, highlighting aspects that are more difficult to interpret and revisiting the most relevant features that could impact your business.
-
IFRS 3
Mergers and acquisitions are becoming more common as entities aim to achieve their growth objectives. IFRS 3 ‘Business Combinations’ contains the requirements for these transactions.
-
IFRS 8
Our ‘Insights into IFRS 8’ series considers some key implementation issues and includes interpretational guidance in certain problematic areas.
-
IFRS 16
Are you ready for IFRS 16? This series of insights will help you prepare.
-
IAS 36
Insights into IAS 36 provides assistance for preparers of financial statements and help where confusion has been seen in practice.
-
IFRS 17
Explaining the key features of the Standard and providing insights into its application and impact.
-
Pillar 2
Key updates and support for the global implementation of Pillar 2.
-
Global expatriate tax guide
Growing businesses that send their greatest assets – their people – overseas to work can face certain tax burdens, our global guide highlights the common tax rates and issues.
-
International indirect tax guide
Navigating the global VAT, GST and sales tax landscape.
-
Global transfer pricing guide
Helping you easily find everything you need to know about the rules and regulations regarding transfer pricing and Country by Country reporting for every country you do business with.
What is consideration transferred?
IFRS 3 refers to ‘consideration transferred’ rather than ‘purchase price’ or ‘cost of investment’. The key distinction is that consideration transferred comprises only what is transferred to the former owners of the acquiree in exchange for the acquiree. It therefore means that the consideration transferred excludes any payments that do not relate to what the acquirer has agreed to effect the acquisition of the acquiree (see our article Insights into IFRS 3 – Determining what is part of a business combination transaction for more details). For example, the consideration transferred excludes acquisition related costs but includes contingent consideration.
Components of consideration transferred
Consideration transferred is the sum of the acquisition-date fair values of:
- the assets transferred by the acquirer
- the liabilities incurred by the acquirer to former owners of the acquiree
- the equity interests issued by the acquirer in exchange for the acquiree.
Contractual purchase price vs consideration transferred
Consideration transferred could differ from the contractual purchase price (ie the price stated in the purchase agreement) for different reasons. One of the reasons could be if the overall transaction or arrangement includes elements that (under IFRS 3’s principles) are not part of the business combination. However, it could also be because the fair value of the consideration transferred at the date of acquisition is not the same as the amount stated in the contractual arrangement to determine the purchase price.
The contractual purchase price may include more than one type of consideration. Certain types of consideration could affect reported results at the acquisition date, as discussed further below.
Deferred consideration
Deferred consideration is an obligation to pay a certain amount at a specified date after the date of acquisition. In this case there is no uncertainty regarding whether the amount needs to be paid or the total amount to be paid. Deferred consideration is included in the consideration transferred and is recognised and measured at fair value at the date of the business combination.
In determining the fair value of the deferred consideration, the acquirer adjusts the promised amount for the effects of the time value of money if the timing and amount of instalments agreed to by the parties (the acquirer and the seller) to the contract (either explicitly or implicitly) provides the acquirer with a benefit of financing for the acquisition of the acquiree. This could happen, for example, if the deferred consideration does not bear interest or bears a non-market interest rate. The unwinding of any discount of the deferred consideration is then recognised in the statement of profit or loss.
Contingent consideration
Many business combinations include contingent consideration, often referred to as an ‘earn-out clause’ and defined as an obligation of the acquirer to transfer additional assets or equity interests to the acquiree’s former owners if specified future events occur or conditions are met. This can be a useful mechanism to enable the acquirer and the vendor to agree on terms of the business combination in the face of uncertainties that may affect the value and future performance of the acquired business. A contingent consideration arrangement is inherently part of the economic considerations in the negotiations between the buyer and seller.
Such arrangements are commonly used by buyers and sellers to reach an agreement by sharing particular specified economic risks related to uncertainties about future outcomes of the acquiree. Differences in the views of the buyer and seller about those uncertainties are often reconciled by agreeing to share the risks so that favourable future outcomes generally result in additional payments to the seller and unfavourable outcomes result in no payments, lower payments, or in some cases it can result in consideration previously transferred being returned to the acquirer (ie contingent consideration classified as an asset).
In addition, it is important to note that:
- Goodwill is not adjusted after the acquisition date to reflect changes in the fair value or settlement of contingent consideration except for adjustments qualifying as measurement period adjustments (Our next article on Insights into IFRS 3 – Accounting when the business combination is incomplete at the reporting date will discuss that careful consideration should be given before the business combination is adjusted for items occurring after the date of acquisition) or arising from correction of errors.
- Some contingent consideration arrangements may include transactions that are accounted for separately from the business combination for instance where the additional payment is contingent on the seller remaining as an employee of the acquiree for a certain period after the combination (see our article Insights into IFRS 3 – Determining what is part of a business combination transaction for more details).
As stated above, the classification of a contingent consideration obligation that meets the definition of a financial instrument as either a financial liability or equity is to be based on the relevant definitions in IAS 32. It should be noted that IAS 32 includes in the definition of a financial liability a contract that will or may be settled in the entity’s own equity instruments and is:
- a non-derivative for which the entity is or may be obliged to deliver a variable number of the entity’s own equity instruments, or
- a derivative that will or may be settled other than by the exchange of a fixed amount of cash or another financial asset for a fixed number of the entity’s own equity instruments.
Equity interests of the acquirer
When equity interests of the acquirer, such as ordinary or preference shares, options, warrants and member interests of mutual entities, are issued as consideration, they should be measured using the guidance in IFRS 13 on determining the fair value of an entity’s own equity. IFRS 3 clarifies that it is the fair value at the acquisition date that should be used instead of the fair value at the agreement date even though it is generally on that basis that the acquirer and the buyer negotiated the terms of the arrangement ie the amount of consideration to be paid and the fair value of the acquiree.
Other assets, including business or subsidiary of the acquirer
Transfer of acquirer’s assets
When consideration transferred includes the transfer of non-cash assets of the acquirer to the vendor (eg property, plant and equipment or a business), these assets are remeasured at their fair value on the acquisition date. Any difference between their fair value and their carrying amount is recognised immediately in profit or loss.
However, IFRS 3 provides an exception to the remeasurement of these non-cash assets at fair value at the acquisition date in situations where they are transferred to the combined entity (ie acquirer and acquiree) rather than to the vendor. Effectively, the acquirer retains control of the assets in this situation, and the assets should continue to be measured at their pre-combination carrying amount in the consolidated financial statements of the parent.
Specific considerations
Specific considerations apply to:
- share-for-share exchanges, including combinations of mutual entities
- combinations in which no consideration is transferred.
Share-for-share exchanges and combinations of mutual entities
A business combination can be affected through a share-for-share exchange (ie acquirer issues its shares to the vendors in exchange for the acquiree’s shares). Under IFRS 3, consideration transferred is determined based on the fair value of the shares issued by the acquirer. However, IFRS 3 provides a mandatory alternative if the shares acquired are more reliably measurable. The consideration transferred is measured using the acquisition-date fair value of the acquiree’s equity interests received if this fair value is more reliably measurable than the acquisition-date fair value of the acquirer’s equity interests transferred.
This situation may arise, for example, when a private company acquires a public company whose shares are traded in an active market. The quoted price of the acquiree’s shares is likely to provide a more reliable measure of fair value than an estimate of the value of the acquirer’s shares using a valuation method.
Some specific issues arise in business combinations between mutual entities. These are commonly affected by an exchange of members’ interests. IFRS 3’s alternative in determining consideration transferred for share-for-share exchanges equally applies to such situations. If more reliably measurable, the fair value of the members’ interest in the acquiree (or fair value of the acquiree) is used to determine consideration transferred instead of the fair value of the acquirer’s members’ interest transferred.
Business combinations with no consideration transferred
A business combination can be brought about without paying any consideration. Examples of these situations are the following:
- an investee repurchases its own shares held by other investors resulting in an existing shareholder becoming the majority shareholder
- cancellation or expiry of veto or similar voting rights of other shareholders that prevented the investor from exercising control
- business combinations achieved by contract alone (eg stapled arrangements or forming a dual-listed entity).
Even if no consideration is transferred in these situations, the acquisition method should still be applied for these business combinations. IFRS 3 provides specific guidance on how to determine goodwill.
Computing the amount of goodwill in a business combination, requires the acquirer to aggregate (i) the consideration transferred,(ii) the amount of any NCI in the acquiree; and (iii) the acquisition-date fair value of the acquirer’s previously held equity interest in the acquiree and to compare the total of these three amounts to the net of the acquisition date amounts of the identifiable assets acquired and the liabilities assumed measured in accordance with IFRS 3.
To determine the amount of goodwill when no consideration is transferred, the acquirer must substitute the fair value of any consideration transferred with the acquisition-date fair value of the acquirer’s interest in the acquiree (determined using an appropriate valuation technique).
However, it should be careful not to double count the acquirer’s interest in the acquiree with the acquirer’s previously held equity interest in the acquiree in the two first scenarios above.
In a business combination achieved by contract alone the acquirer can hold no equity interest in the acquiree before or after the acquisition date. In such situations, the acquirer must attribute all of the equity interest held by parties other than the acquirer as non-controlling interest (NCI), even if this results in 100% NCI.
How we can help
We hope you find the information in this article helpful in giving you some insight into IFRS 3. If you would like to discuss any of the points raised, please speak to your usual Grant Thornton contact or your local member firm.