What Happens With Goodwill In An Ipo

What happens with goodwill in an ipo

Think it through SBE. An IPO involves selling shares to raise cash.

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The cash flow statement must show this large inflow. The balance sheet effects discussed above are correct, although it's unlikely that a company would keep this massive balance in cash for any significant period of time.

What happens with goodwill in an ipo

Companies generally use the large inflow of cash from an IPO to pay off some debt and buy assets to expand their business. As for the income statement, the effects are less direct. But if you wanted to be fancy, you could say overhead expenses would increase because you'd have to hire additional accounting professionals to administer your public company requirements, or that interest expenses have decreased since you paid down some debt with IPO proceeds, or depreciation expense increased because you bought some some equipment etc.

What happens with goodwill in an ipo