Due Diligence & Risk Mitigation

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• Quality of earnings and cash flow reporting
• EBITDA bridge analysis
• Quality of financial, inventory, billing, and accounting systems
• Appropriateness of accounting policies and procedures
• History of and likelihood of audit adjustments to interim financial results
• Quality of collateral to secure the transaction in coordination with our Appraisals division
• Potential for off book assets & liabilities and other contingencies
• Quality of internal controls, management routines and oversight
• Assessment of past accuracy and future reasonableness of projections of future financial performance
• Proof of cash
• Strength of financial staff
• Customer and vendor concentration risk assessments
• IT and systems infrastructure review
• Foreign Corrupt Practice Act risk assessment

 A quality of earnings report is a critical step in the due diligence process because it assesses the sustainability and accuracy of historical earnings, as well as the probability of future projections. We analyze a target company's historical financial statements and comparable data on similar companies to accurately generate a benchmark and forecast earnings potential. A full scope quality of earnings report documents risks in a company targeted for an acquisition and assesses three distinct items in a report, including: cash versus non-cash, recurring versus non-recurring and core business versus external factors. This type of reporting provides an independent review of the target company and can often uncover risks or liabilities missed in the buyer's initial assessment. Additionally, it can be used at the board level to provide reassurance that an acquisition is predicated upon sound data. We deliver comprehensive, accurate reports to ensure clients receive information that might impact a potential acquisition. 

A purchase price allocation (PPA) allocates the purchase price to assets and liabilities acquired in the transaction. Potential assets include working capital, personal and real property, and intangible assets. Our team has helped businesses conduct over a thousand PPAs for them to report the opening balance sheet at fair value and satisfy generally accepted accounting principles (GAAP) requirements.

We collect historical and projected financial statements, fixed-asset listings, quality-of-earnings analyses and other data to create a complete picture of a company's value that satisfies auditors, lenders and investors. GAAP and the Financial Accounting Standards Board (FASB) require a timely PPA. Understanding the correct opening fair value is crucial not only for compliance purposes, but also affects all future financial accounting, including earnings and balance sheets.