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Due Diligence Readiness

Case in Point

An Investment Banking firm needed assistance in gathering and analyzing financial information for the sale of a lower market Government Contractor.

Situation Assessed

An Investment Banking firm needed technical horsepower to gather and analyze the Company’s financial data for presentation within the CIM, while the Bank concurrently prepared the Company’s go-to-market strategy.

Challenges Encountered

  • The Company had information spread across multiple accounting systems spanning several periods and resulting in an incomplete 12-month G/L
  • Adequate financial records for key contracts were not properly maintained, including revenue waterfalls, indirect cost calculations, and unallowable expenses
  • Revenue recognition was not consistent with the Company’s performance of services on specific contracts
  • The Company’s financial team had limited experience with corporate exits and sell-side due diligence

Value
Delivered

  • Fostered a steady working cadence with Investment Bank, becoming an extension of their team during the sales process
  • Consolidated financial information into a single, excel data book and prepared critical financial documents for upload to the data room
  • Assessed the revenue recognition for key contracts, and assisted the CFO with revising internal financial statements
  • Developed a consolidated contract waterfall and created an extension of the model allowing for prospective buyers to run iterative scenario analysis
  • Created a sounding board for the Company’s CFO and finance team regarding sell-side due diligence readiness and what to expect during the exclusivity stage

Outcomes Achieved

  • Alleviating certain accounting aspects from the Investment Bank, which allowed them to spend more time identifying prospective buyers and focusing on the strategic aspects of the sale
  • Mitigating financial risks and developing proper financial supporting documents created downstream efficiencies for the buy-side due diligence teams
  • Providing a sounding board the Company’s financial team managed their expectations and inspired confidence, resulting in a successful and timely deal completion