Technical Accounting Depth on Demand for a Growing Wealth Management Firm

How an acquisitive, private-equity-backed investment adviser gained technical accounting support to move through its deals and audits with confidence.

Client

A registered investment adviser (RIA) in the wealth management space had built its growth strategy around acquisition. Backed by a private equity sponsor, the firm regularly acquires other wealth management practices to expand its footprint and its client base. Every one of those deals brings a wave of complex accounting work, and the firm needed a way to handle it without slowing down.

The finance function was led by a controller and a chief financial officer (CFO) with deep operational accounting and finance experience. What the firm did not maintain in-house was dedicated technical accounting capacity, which is common among growing organizations. Standing up a full technical accounting team is costly, and the need for that capacity tends to spike around transactions and year-end audits rather than run steadily all year. The firm wanted to bring in that capability when the work called for it without carrying the overhead the rest of the time.

The Challenge

The firm faced technical accounting demands on two fronts: the acquisitions themselves and the reporting and audit cycle that followed each one.

Acquisition Accounting on Day One

When the firm acquires another practice, the accounting has to be correct from the closing date. That means reviewing the acquired balance sheet, identifying the assets and liabilities coming over, and recognizing acquired intangible assets such as customer relationships and trademarks. Each of those items has to be measured and recorded at fair value under US generally accepted accounting principles (GAAP). Getting the opening balance sheet wrong creates problems that resurface later in the audit.

A Broader Reporting Modernization

Beyond the deal work, the firm was bringing its financial reporting fully in line with current GAAP. That meant adopting the current standards for revenue recognition, lease accounting, and current expected credit losses (CECL). What began as a single purchase accounting project grew into a full GAAP conversion that touched all of these areas.

Audit Questions That Called for Dedicated Technical Support

Each year, the firm’s auditors asked for support on technical areas including revenue recognition, leases, share-based compensation, and the complex instruments the firm had issued. A finance team focused on the organization's day-to-day operations is not typically positioned to produce technical accounting memos or field detailed questions like these on top of its regular workload. Answering them called for dedicated technical accounting support the firm could bring in as needed.

The Approach

EisnerAmper’s Technical Accounting Advisory Services team stepped in as the firm’s on-call technical accounting function. The relationship started with a single acquisition and grew over several years into a resource the firm returns to for each new deal and each audit season.

Getting the Acquisition Accounting Right

The engagement began with the accounting for the firm’s acquisition. The team reviewed the acquired balance sheet, identified the intangible assets that needed to be recognized, and worked alongside the valuation professionals on the deal to record the acquired assets and liabilities at fair value. The goal was a clean, well-supported opening balance sheet that would hold up under audit.

Surfacing Cost-Saving Options

As part of that work, the team raised an option the firm’s ownership had not considered: electing the private company accounting alternatives established by the Private Company Council (PCC). Those alternatives can simplify how certain acquired intangible assets and goodwill are handled, which reduces both cost and effort on future acquisitions. It was a small piece of guidance with real downstream value for an organization that plans to keep acquiring.

Building the Reporting Foundation

From there, the work expanded into a full GAAP conversion. The team helped the firm adopt the current revenue recognition, lease, and credit loss standards, and it prepared the technical accounting memos that support each of those positions. As new questions came up during the year-end audits, the team addressed them directly, so the firm entered each audit cycle with its technical accounting already documented.

The Results

Over several years, the engagement has given the firm a dependable technical accounting function it can call on exactly when it needs one.

Beyond any single deliverable, the firm gained confidence. Its leadership can pursue the next acquisition knowing the accounting will be handled correctly, the audit will hold together, and answers to hard technical questions are only a phone call away.

The firm gained on-call access to technical accounting depth for its acquisitions and audits without adding permanent in-house resources or the cost that comes with them.

Each acquisition now moves forward with a clean, well-supported opening balance sheet, including properly identified and valued intangible assets such as customer relationships and trademarks.

A full GAAP conversion brought the firm’s reporting in line with the current revenue recognition, lease, and CECL standards, with supporting memos in place.

By electing private company accounting alternatives, the firm positioned itself to reduce cost and effort on future deals.

Year-end audits run more smoothly because the technical accounting positions and memos the auditors ask for are prepared in advance.

Technical Accounting Support

EisnerAmper’s Technical Accounting Advisory Services professionals help organizations navigate a complex accounting environment without adding costly technical accounting resources of their own. Whether you are working through the accounting for an acquisition, adopting new standards, preparing for an audit, or getting ready for a transaction, the team can provide the depth you need to fit your situation.