M&A Case Study: Delivering Sell-Side Due Diligence Under Tight Constraints
Challenge
A leading manufacturing company was preparing to go to market for sale, but confidentiality concerns severely restricted access to key financial personnel. The due diligence process was initiated just three weeks before the company’s market debut, far shorter than the typical timeline. Additionally, our team was only given access to the company’s tax preparer, limiting our ability to conduct in-depth financial interviews. Despite these challenges, the company was under a Letter of Intent (LOI) just two weeks after the completion of the sell-side Quality of Earnings (QofE) report.
Solution
To navigate these constraints, our team employed a strategic approach:
Creative Access to Financial Dat: Gained access to the company’s accounting system under the guise of conducting a bank audit, ensuring we obtained the necessary financial insights without disrupting confidentiality.
Rapid Turnaround: Compressed the QofE timeline, conducting rigorous analysis in just three weeks—less than half the standard timeframe.
EBITDA Adjustments & Normalization: Identified and reclassified inventory costs to improve gross margin presentation and uncovered over $105,000 in related-party compensation expenses that required adjustment. Pinpointed personal expenses running through the business, normalizing over 10% of EBITDA to reflect true financial performance.
Results
Successful Sale: The company completed its sale without financial discrepancies derailing the process.
Validated Findings: The buy-side due diligence, conducted by a Big Four firm, did not identify any material issues beyond what we had already addressed.
Strengthened Investment Bank Relationship: Our ability to deliver a high-quality QofE under extreme constraints led to an ongoing relationship with the investment bank, resulting in multiple future engagements.
This case underscores our ability to execute high-impact transaction advisory services under challenging conditions, ensuring both sellers and their advisors have the financial clarity needed to close deals with confidence.
