Case Study: The Acquisition of SimpleCast by Sirius XM

Accounting Considerations and Due Diligence for Acquisition

SimpleCast was founded to make podcast distribution, analytics, and monetization easier for independent creators and small media firms.

On June 16, 2020, Sirius XM acquired Simplecast for $28M in cash. Simplecast is a podcast management and analytics platform. Simplecast complements AdsWizz’s advertising technology platform, allowing the company to offer podcasters of all sizes a powerful, comprehensive solution for publishing, analytics, distribution and advertising sales, and is included in the Pandora reporting unit. The Simplecast acquisition was accounted for using the acquisition method of accounting. We recognized goodwill of $17, amortizable intangible assets of $12, other assets of less than $1 and deferred tax liabilities of $1.

The acquisition process involved multiple layers of financial review, audit, and compliance that required precise accounting support. Here’s a breakdown of what was involved:

Preparation of Clean Financials

Objective: Ensure that the financial statements presented a true and fair view of the company’s performance.

• Revenue recognition (SaaS-based, monthly subscriptions)
• Deferred revenue handling
• Expense categorization and capitalization 
• GAAP Compliance: Converted internal cash-basis books to GAAP-compliant accrual basis accounting.
• Reconciliation: Bank accounts, receivables, and payables reconciled for all periods under review.

Revenue and Customer Analysis

Objective: Show sustainable, recurring revenue and customer growth.

• MRR/ARR Reconciliation: Monthly recurring revenue reports matched to general ledger.
• Churn and LTV Reports: Financial analysts prepared lifetime value, CAC (customer acquisition cost), and churn rates.
• Deferred Revenue Liabilities: Accurately reported to ensure SeriesExam could assess unearned revenues.

Cap Table and Equity Reconciliation

Objective: Validate equity ownership for all stakeholders.

Reviewed and updated the cap table in Carta to confirm share counts, option grants, SAFEs, and preferred shares.

• 409A Valuation was updated within 6 months of the transaction to justify share pricing.
• Ensured all board minutes authorizing share issuance and stock option grants were in order.

Due Diligence Support

Objective: Provide accurate and transparent financial data for buyer’s review.

SimpleCast’s CFO and accounting team worked closely with legal and investor banker advisors

Post-Acquisition Integration Planning

Objective: Ensure smooth transition into Sirius XM reporting systems.

• Provided a chart of accounts mapping to integrate with Sirius XM ERP system.
• Worked with the buyer’s accounting team on closing balance sheet adjustments and purchase price allocation (PPA).
• Prepared for audit trail continuity—ensuring all ledgers and documents could be accessed by Sirius XM post-close.

Outcome

Thanks to meticulous preparation and thorough accounting work, the acquisition closed without delays

Key Takeaways

• Accounting is critical to the success of startup exits.
• GAAP-compliant financials, strong documentation, and due diligence readiness can accelerate acquisition timelines and improve valuation confidence.
• Founders should invest early in accounting systems and professionals to ensure future exits are smooth and stress-free.

Alajian Group’s Role in the Acquisition

As the accounting firm for SimpleCast, Alajian Group was brought in to:

• Clean up and prepare the company’s financials for due diligence
• Identify and resolve any accounting or tax red flags that could impact valuation
• Represent SimpleCast in conversations with SeriesExam’s financial and legal teams
• Provide ongoing support through the closing and post-acquisition transition

Here’s how Alajian Group added value at each critical stage of the deal

Due Diligence Support

Alajian Group acted as the point of contact for all financial due diligence inquiries.

• Set up and managed the virtual data room, organizing financial documents, tax filings, and cap table records
• Responded to more than 100 inquiries from SeriesExam’s auditors and advisors
• Flagged and addressed concerns related to revenue recognition, customer contracts, and sales tax compliance

This level of preparation built trust with SeriesExam and accelerated the due diligence timeline.

Equity and Cap Table Reconciliation

SimpleCast had issued multiple rounds of SAFE notes, common and preferred shares, and employee stock options.

Alajian Group:

• Verified the cap table and traced equity transactions to supporting documentation
• Worked closely with the company’s legal counsel to align 409A valuations, vesting schedules, and board approvals
• Ensured that investor and employee equity stakes were properly recorded for the sale

Tax Review and Optimization

With tax efficiency a major concern for the founders and investors, Alajian Group provided:

A full review of state and local tax nexus, ensuring no outstanding liabilities

• Analysis of Net Operating Losses (NOLs) and their usability post-acquisition
• Structuring advice for a stock sale to minimize double taxation and simplify legal ownership transfer
• Preparation of tax projections for each stakeholder class (founders, early employees, investors)

Financial Reporting and Post-Close Integration

Alajian Group remained involved after the transaction closed to help with:

Purchase Price Allocation (PPA) support, providing the buyer with documentation to value assets and goodwill

• Mapping SimpleCast’s chart of accounts to SeriesExam’s ERP
• Finalizing closing working capital adjustments
• Advising on the transition of payroll, vendor relationships, and subscription billing under the new entity

Results

SimpleCast was able to continue scaling post-acquisition with minimal disruption.

Conclusion

The acquisition of SimpleCast was a textbook example of how expert accounting guidance can make or break a startup exit. By partnering with Alajian Group, SimpleCast was able to present clean financials, confidently navigate due diligence, and ensure a successful, high-value exit for all stakeholders.

Key Takeaway:

Whether you’re planning to scale or sell, having a strategic accounting partner like Alajian Group is essential to getting the numbers right—and getting the deal done.