Q: If a business is being purchased, may the acquiring bank rely on the purchaser's revenues when reporting data? How would the acquired entity's revenue be considered? Similarly, if an established business is starting a business, what revenue figures would be used?
A: A number of scenarios may arise relating to startups and business acquisitions. Consistent with previous answers and Q&A _.42(a)(4)-3, an institution would generally use gross annual revenue for existing business entities and actual revenue for a start-up business that were relied on in making the credit decision. Because the Q&As do not address all possible scenarios, institutions should consult their primary regulator regarding the treatment of specific transactions.
Users are advised that references to CRA Interagency Q&As may have been updated since that webinar.