Pro forma financial statements

Pro forma financial statements are restated accounts designed to present a company's position as if a given transaction had already taken place, or as if a different scope had applied. They do not replace statutory accounts: they adjust them to neutralise exceptional items, integrate an acquisition, isolate a divested activity or simulate a new financing structure.

‍

They play a central role in corporate transactions. In a Carve-out (carve-out), pro forma accounts reconstruct a division's results as if it had always been standalone, reallocating shared costs and support functions. In financial due diligence, they allow reasoning on a normalised EBITDA and restated debt, more representative of economic reality than historical accounts alone.

‍

Take a group that divests a division representing 6 MCHF of revenue. The pro forma accounts remove that revenue and the associated direct costs, but add back 0.4 MCHF of head-office costs previously borne by the division, so as to present the retained scope as if it had always been autonomous.

‍

Building pro forma accounts requires explicit, documented assumptions, failing which the assessment of value is distorted. For a seller, presenting clear and defensible pro forma accounts speeds the buyer's understanding of the file and limits friction in the price negotiation.