due diligence

Our robust due diligence process is designed to bring to the forefront potential risks, assess their magnitude, consider whether mitigation is possible, and respond accordingly.

WHAT TO EXPECT

DEEP EXPERTISE

Our combined years of experience allow us to be involved in every aspect of your financial transactions. We provide our clients with real-time communication on key deal drivers and an intense focus on the root cause of any critical issues.

INTEGRATED APPROACH

Integrated due diligence is the only way to really understand how pulling a lever in one area of the business will affect assumptions in another. It produces insights that a one-dimensional approach to diligence cannot inform.

STRONG TRACK RECORD

Every deal is different, and the path to value creation is unique. Our services are customized to meet the individual needs of any client, to help define the right strategy, realize your goals, and identify future opportunities.

FOCUS AREAS

QUALITY OF EARNINGS

A good quality of earnings should provide insight into critical aspects of the company’s operations to help identify how the business might perform on a go-forward basis when adjusted for expenses and revenues that are not expected to occur in future years.

NET WORKING CAPITAL

A net working capital analysis is one of the key areas in financial due diligence since it has a potential dollar-for-dollar impact on the purchase price. Net working capital should be sufficient for the target business to generate the same amount of cash flow used in determining the purchase price.

VALUATION MULTIPLES

When looking at similar transactions, having the right data can mean the difference between closing a deal at the right price or missing out altogether. We analyze all aspects of the business, including the company’s management, capital structure, future earnings, and the market value of assets.

PROJECTIONS

Typically, companies don’t end up well-capitalized, with strong balance sheets and healthy cash flows by chance. Financial health is a function of rigorous data analysis, deep familiarity with the business and up-to-date customer and market insights - all critical components of realistic projections.

NON-RECURRING ADJUSTMENTS

Acquisitions are typically priced based on a multiple of EBITDA. As a result, EBITDA, as reported, should be critically analyzed for non-recurring /one-time adjustments so that a buyer may not pay too much for the target, lowering potential returns and negating the value of potential synergies.

CAPITAL EXPENDITURES

Knowing if you will need to make a significant cash expenditure in the next few years should be considered in the offer price. Taking note of what the assets are and how old they are is critical to determining the cash outlay required in the short term.