Definition: Business Events, also known as business meetings or negotiations, are events that alter a business’s financial condition and are regularly measured. Simply put, an event is an ongoing business transaction which impacts the accounting equation in a given period of time. The accounting measures used to determine net income (or profit) from an activity represent a measure of the value of the transaction. The measurement of value is determined by comparing an asset with an equivalent paid-in capital asset and net worth, which is net worth less any debt paid during the course of the transaction. There are various types of business events that could alter these measurements, such as initial public offerings ( IPOs), leveraged buyouts, initial public offerings ( IPOs), partnership agreements, acquisitions, divestitures, restructurings, and bankruptcy proceedings.
An IPO is an example of an initial public offering ( IPO ). It is a business event that alters the accounting equation when initially measured using purchases (equity). Net debt and retained earnings at the time of the IPO impact the stock price and therefore the worth of the business event. This would result in an impairment for the balance sheet and would require an event of default for the shareholders to terminate their debt. Similarly, a leveraged buyout may also have an impact on the balance sheet as equity is used in the transaction and goodwill is used to obtain a benefit for the business.
An example of an impairment in assets would be a company merger or acquisition which results in a change in control (or ownership) of the business. Another good example would be an initial public offering if the business is not able to raise enough capital to satisfy the requirements for a subscription based on the offering date. An event of default occurs when the borrower of the capital borrows more than it is able to repay and so now owns the business. Usually this type of event causes the recorded instruments to lose their fair market value.
One can also consider impairment of goodwill or assets when a business is sold, purchased, or merged. There are several potential reasons for an impairment in the book of accounts. One might be due to a fraudulent purpose of the purchaser. Another reason might be that the business people of the former corporation are replaced by new business people with limited knowledge of the business assets and control. A third reason might be that there is an outside influence on the transaction which alters the accounting equation.
In order to deal with business events which cause impairment in book of accounts, it is important to first use business event accounting software and then follow certain procedures in order to track the events. One such procedure is use of bid strategies. A bid strategy makes use of the event data in order to generate strategies which can make better use of the data and minimize the risks of making errors in the process of purchasing an enterprise. Other procedures related to these events include review of financial statements and balance sheets for analysis and reporting purposes. This helps in the management of financial problems which might arise out of these events.
There are many advantages of using a bid strategy in order to deal with business events which lead to impairment in cash flows. Firstly, the bid strategy makes use of the entire event data and hence this results in quick calculation of cash flows. Secondly, it saves time and effort in doing accounting as it makes use of business data table and performs complex operations which otherwise would be tedious and time consuming. Finally, it minimizes any loss of profits in case there is any event of non performance of an enterprise. The faster the sale, the faster the payment and the quicker the return on investment, and hence the company can achieve its goals in a faster manner and without much effort.