Mergers & Acquisitions Due Diligence | research + analysis
Before you acquire another business, it is essential to carefully assess the selling company’s representations about its earnings, assets and liabilities. Due diligence also ensures that you don’t overpay and that you fully understand all the risks involved.
We conduct rigorous due diligence on behalf of clients considering a merger or acquisition.
Our process generally involves:
- Validating all of the seller’s representations by thoroughly investigating and analyzing the target company’s assets, liabilities and historic earnings
- Providing a formal report on our due diligence findings for your board of directors or investment committee
- If required, conducting a post-closing audit of the target company’s balance sheet
We always work closely with your legal representatives and other advisors to make the entire process as efficient as possible.
Understanding your goals
At StoneBridge Business Partners, our first priority is to focus on the problems, goals, and issues important to you and your company. Our concentrated client-focused approach ensures that we are delivering exactly what you need.
Our unique approach
StoneBridge brings a unique combination of skill sets to each assignment. We combine StoneBridge experience in merger & acquisition transactions and business valuation knowledge with the audit skills of our associated EFP Rotenberg staff to offer you the best solution for your due diligence needs.
Because we are affiliated with EFP Rotenberg, a leading regional accounting firm, you can also count on us to provide sound advice on the tax implications of the investment and acquisition structures being considered. In addition, EFP Rotenberg’s membership in the BDO Seidman Alliance gives us access to the expertise and resources of one of the largest accounting and consulting firms in the United States.
A full portfolio of services
To help our clients validate value and minimize risks, we cover three key areas of due diligence: financial reviews, accounting reviews, and business reviews.
Financial reviews
When we represent buyers, we typically:
- Validate Pro-forma EBITDA
- Justify “add-backs” and/or non-recurring expenses
- Assess the appropriate amount of “normal” working capital
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When we represent sellers, we typically:
- Organize, maintain and provide due diligence materials to the buyer
- Help negotiate business aspects of the definitive agreement
- Provide an independent review of the overall value established for the business
Accounting reviews
We inspect the target company’s historical financial statements and accounting policies and procedures. These reviews usually cover:
- Accounting systems and records
- Internal accounting procedures
- Internal financial statements
- Outside accounting services
- Represented balance sheets, including cash, accounts receivable, inventory, fixed assets, accounts payable, and contingent liabilities
- Represented income statements such as proper revenue and expense recognition
- Tax liabilities and obligations
Business reviews
We can investigate specific areas of concern about the target company’s industry and operations. These reviews provide an in-depth analysis of the target company’s:
- Industry
- Competitive environment
- Products and services
- Customers
- Key suppliers
- Sales and marketing
- Information technology systems
- Human resources issues, including background checks
Our due diligence investigations often provide negotiating leverage to our clients, resulting in better pricing and/or terms and a better awareness of the challenges and issues facing the organization.
By combining these services with our experience, expertise and in-depth commitment to our clients’ best interests, we help closely held businesses, private equity funds, small public companies, high net-worth individual investors, and middle-market investment banks complete the essential due diligence activities they need for successful M&A transactions.