On 17 October 2017, the staff of the SEC’s Division of Corporation Finance updated its compliance and disclosure interpretations (C&DIs) regarding disclosure of non-GAAP financial measures in the context of business combination transactions.

The new C&DI states that financial measures included in forecasts provided to a financial advisor and used in connection with a business combination transaction are not considered non-GAAP financial measures if the following two conditions are met:

  • the financial measures are included in forecasts provided to the financial advisor for the purpose of rendering an opinion that is materially related to the business combination transaction; and
  • the forecasts are being disclosed in order to comply with Item 1015 of Regulation M-A or requirements under state or foreign law, including case law, regarding disclosure of the financial advisor’s analyses or substantive work.

In disclosures of such financial measures in other circumstances, companies will be required to comply with the SEC’s rules relating to non-GAAP measures, namely Item 10(e)(5) of Regulation S-K and Rule 101(a)(3) of Regulation G.

The SEC’s C&DIs are available at:

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