Closing balance sheet
Acquirer plus target plus adjustments, balanced.
By Surojit Chakraverti, founder of L3VLUP and an investor running a long-short healthcare and technology equities strategy.
On this subject: closing balance sheet.Updated 2 October 2026
What it does
The day-one balance sheet of the combined company. The acquirer and the target sit side by side at book; an adjustments column then removes the target’s equity and old goodwill, adds the write-ups, new intangibles, goodwill and the deferred tax liability, repays the target’s debt, adds the new acquisition debt and shares, and takes the cash used and the expensed transaction costs out. Every adjustment has an equal and opposite one, so the column balances, and if it does not the allocation is wrong.
Where it lives
The same schedule in each model that carries it, with the rows to open. Open a model in the browser, go to the sheet, and click the lines.
- Assumptions, rows 22–31: Target: cash, Target: receivables, Target: inventory, Target: property, plant and equipment, net…
- Assumptions, row 48: Structure shown on the closing balance sheet (1 = stock deal, 2 = asset deal)
- Assumptions, rows 51–60: Acquirer: cash, Acquirer: receivables, Acquirer: inventory, Acquirer: property, plant and equipment, net…
- Closing, rows 6–12: Cash, Receivables, Inventory, Property, plant and equipment…
- Closing, rows 15–21: Payables, Accrued liabilities, Debt: new acquisition debt, target debt repaid, Deferred tax liability…
What a reviewer looks for
- Adding the target’s equity to the acquirer’s.
- Leaving the target’s refinanced debt on the balance sheet.
- Transaction costs capitalised into goodwill rather than charged to equity.
Learn it, then build it
Read · Guide · 12 min
How to Build a Merger Model: Purchase Accounting, Financing and Accretion
Read · Guide · 7 min
"Walk Me Through the Three Statements" — And Every Follow-Up
Vocabulary: Goodwill, Purchase Price Allocation (PPA).