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is there a market standard that people refer to for accounting for changes to financial period comparisons (e.g. year-over-year revenue metrics) when the company makes acquisitions or divestitures? This by nature seems like a manual, painstaking process, so I am wondering if there's a way to avoid that when running quantitative strategies.

Thank you!

Z_D
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  • Anyone have a sense? Surprised that there isn't some form of consensus around it. – Z_D Sep 16 '19 at 19:54
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    It is a big messy problem... Especially when you are following thousands of stocks... some quants simply throw the stock out when the acquisition takes place (your algo still has plenty of other stocks to trade ;) ). You can also try to define your stats so they are normalized to the size of the company and are more comparable before/after an acquisition. For example Revenue as a percent of Market Value, instead of just Revenue. – Alex C Sep 16 '19 at 20:36
  • Thanks, Alex. Totally with you on the messy problem, and the normalization is a good idea. Better than throwing it out totally, probably. – Z_D Sep 17 '19 at 16:13

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