Fictional company and figures. This example explains a reporting method. It contains no client data or actual investment results.
Define the comparison before calculating growth
Start with the entities, periods, and revenue definitions included in each view. Consolidated actuals show revenue included in the group’s reported results; in this simplified management example, the acquired company enters those results from its April 1 closing date. Legacy organic growth compares the businesses the group owned throughout both years. A separate same-perimeter view adds the acquired company’s full-year historical revenue to both periods.
These are reporting conventions for this example, not interchangeable labels. State the perimeter in the report. Acquired businesses may enter an organization’s organic measure after a defined ownership period, but changing that rule without explanation breaks the comparison. Use comparable accounting policies and resolve intercompany eliminations before presenting a bridge.
A fictional services platform
All figures below are fictional and in USD millions. The group buys one business on April 1, 2026. Legacy revenue increases from $100 million in 2025 to $108 million in 2026. The acquired company produces $18 million over the current full year. Assuming equal quarterly revenue, $13.5 million falls after closing and enters consolidated actuals; $4.5 million falls before closing. Its prior full-year revenue was $15 million.
The actual revenue bridge is therefore $100 million + $8 million of legacy growth + $13.5 million of acquisition contribution = $121.5 million. Reported growth is 21.5%, while legacy organic growth is 8%. Both are correct; they describe different changes.
| View | 2025 | 2026 | Growth |
|---|---|---|---|
| Legacy businesses · full year | 100 | 108 | 8% |
| Acquired business · full year | 15 | 18 | 20% |
| Acquisition revenue included in group actuals | 0 | 13.5 | Not comparable |
| Consolidated actual revenue | 100 | 121.5 | 21.5% |
| Same-perimeter pro forma revenue | 115 | 126 | 9.6% |
The rows show different views and should not be added together. Consolidated actuals = legacy full-year revenue + acquisition revenue since closing. Pro forma revenue = legacy full-year revenue + acquired-business full-year revenue.
Reconcile the actual revenue
100.0 + 8.0 + 13.5 = 121.5
Prior-year reported revenue + legacy organic increase + acquisition revenue since closing = current-year reported revenue.
Growth formulas and definitions
- Reported growth = (current consolidated actual revenue − prior consolidated actual revenue) ÷ prior consolidated actual revenue.
- Legacy organic growth = (current legacy revenue − prior legacy revenue) ÷ prior legacy revenue, using the same entity perimeter and periods.
- Acquisition contribution = revenue included in consolidated actuals from the acquisition’s closing date; here, $13.5 million for April–December.
- Same-perimeter pro forma growth = (current full-year revenue for the combined perimeter − prior full-year revenue for that perimeter) ÷ prior full-year revenue for that perimeter.
Keep actual and pro forma views separate
The same-perimeter pro forma comparison is $115 million in 2025 and $126 million in 2026, or 9.6% growth after rounding. It includes the acquired business for a full year in both periods. That helps assess the combined operating base, but the current pro forma total includes $4.5 million earned before the group owned the business. It is not the group’s $121.5 million of consolidated actual revenue.
Label this as a management pro forma view and disclose what was added. Do not insert an unowned period into actual results or present pro forma growth as legacy organic growth. Keep the acquired business’s own comparison visible: $15 million to $18 million is 20% full-year growth. That explains why combined same-perimeter growth exceeds the legacy business’s 8%.
Use each view to make a different decision
- Consolidated actuals: reconcile the package to reported revenue and explain the increase in the group’s size.
- Legacy organic performance: investigate pricing, volume, capacity, or customer changes within the established business.
- Acquisition contribution: track the revenue included since closing and compare the same ownership months with the acquisition plan.
- Same-perimeter performance: assess the combined operating base across comparable periods without confusing ownership timing with growth.
Extend the same discipline to EBITDA and cash. Revenue contribution alone does not establish that the acquisition met its investment case. Show margins and any integration costs separately, and identify the accounting or management adjustments included in each measure. A revenue bridge should explain revenue; it should not carry an unsupported claim about value creation.
Make the bridge repeatable
Maintain an acquisition register with closing dates, entity mappings, and the reporting perimeter. Tie each revenue slice to source data, reconcile the bridge to consolidated actuals, and record any reclassifications. Preserve the prior-period definition so that next month’s growth rate remains comparable.
The review should end with a question for management: which change requires action, who will investigate it, and when will the next report show the result? The bridge provides the evidence for that discussion; the growth percentage alone does not.
Errors to catch before the package goes out
- Calling the full 21.5% reported increase organic growth.
- Comparing nine months of acquired-company revenue with its prior full year.
- Adding pre-closing revenue to actual results without identifying a pro forma view.
- Changing entity mappings, accounting definitions, or the organic perimeter between periods without showing the effect.