Our due diligence specialists can assess the financial and operational performance of an entity, whether you are a strategic buyer, financial investor, or lender.

We work to prepare a company and its management for the sale process through comprehensive sell-side due diligence designed to speed the process by vetting the quality of earnings and identifying potential transaction considerations before going to market. Whether it’s for an acquisition, sale, or refinancing, we will tailor our due diligence services to meet your specific needs.

Quality of earnings

  • EBITDA analysis
    • Validate management’s proposed adjustments
    • Due diligence adjustments
    • Pro forma adjustments
  • Free cash flow analysis
  • Risk profile analysis
    • Revenue and margin concentrations
    • Distribution
      • By customer
      • By SKU
      • By channel
      • By intellectual property
    • Vendor concentrations
    • Break-even analysis and operating leverage
    • Price and volume variances
    • Key man issues
    • Seasonality and cyclicality
    • Identification of integration risks and considerations
    • Assessment of the adequacy of seller representations and warranties
  • Appropriate revenue recognition and other GAAP/IFRS considerations

Quality of assets

  • Net working capital analysis
    • Adequacy of reserves
    • Impact on free cash flows
    • Seasonality
    • Considerations for the net working capital adjustment post-close
  • Liquidity needs assessment
  • Fixed asset analysis
    • Growth vs. replacement capital expenditures
    • Repairs and maintenance policies
    • Impact on free cash flows
  • Related parties analysis
  • Debt and debt-like analysis
    • Unrecorded and under-recorded liabilities
    • Commitments and contingencies
    • Legal and regulatory exposure

Taxation

  • International – local compliance requirements
  • Federal – income tax filing compliance, tax planning opportunities
  • State and local – nexus filing requirements, sales and use tax compliance
  • Other tax due diligence – unclaimed property, payroll tax compliance, analysis of ad valorem taxes

Commercial

  • Quality of the customer
  • Voice of the customer
  • Go to market strategy assessment
  • Assessment of sales channel

Financial modeling

  • Financial projections
    • Balance sheet, income statement, statement of cash flow
    • Free cash flows
    • Bank covenant compliance
  • Sensitivity analysis

Information technology

  • Identify risks and opportunities
  • Assess technical environment
  • Determine cybersecurity risks
  • Assess e-commerce capabilities

Human resources

  • Regulatory compliance
  • Staffing strategy assessment
  • Analysis of employee compensation and benefits
  • Assessment of human resource management practices

Our Take

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“Our objective is to validate your investment thesis by verifying the assumptions made when the deal was negotiated, seek out issues and opportunities the buyer/creditor was not aware of, and provide our client with the data and insight to help formulate a post-transaction plan.”

— William A. Chapman Partner, Managing Director, CPA, CFA