Financial Due Diligence (QofE)

A comprehensive analytical assessment of the sustainability and quality of a company's reported earnings. Our QofE reports dissect revenue recognition policies, identify non-recurring and non-operational items, assess management's accounting judgments, and recast EBITDA to reflect the true ongoing earnings power of the business — the foundation upon which every transaction is ultimately valued.

Establishing the appropriate normalized working capital target — the 'peg' — that governs post-closing purchase price adjustments. Our NWC analysis examines historical working capital seasonality, identifies unusual fluctuations, and calculates a defensible peg that protects buyers from acquiring a business with below-normal liquidity and shields sellers from post-closing clawbacks.

Synchronizing operational data with financial reporting to ensure the integrity of revenue recognition and identify potential margin erosion across diverse service and product lines.

Converting cash-basis financial statements to an accrual basis to enable proper comparison, normalization, and valuation. Many middle-market businesses prepare financials on a cash basis for tax purposes; our cash-to-accrual bridges transform these statements into the format required for transaction analysis, revealing the true revenue, expense, and balance sheet positions of the enterprise.