Union Bank of Switzerland (UBS) Interview Practice Test

In an M&A model, balance sheet adjustments reflect what actually changes hands at closing: the cash you acquire or pay off, the debt you assume or retire, and the goodwill created from allocating the purchase price to identifiable net assets. Cash and debt are direct, concrete items on the closing balance sheet, and goodwill results from the purchase price allocation when the transaction is consolidated. Working capital, while crucial for deal economics and often used to set a target or true-up at close, is treated as a separate normalization measure rather than a direct balance sheet line item adjustment. Because of that, it’s not listed as a standard balance sheet adjustment, unlike cash, debt, and goodwill.