07.01.15

Buy-side Due Diligence For Middle Market Private Equity Firm

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Business Issue:

Riveron’s private equity client focuses its investment efforts on opportunities such as bankruptcies, turnarounds, and other challenging situations. Typically, the firm buys companies in industrial, heavy manufacturing and related service industries, and believes it can generate high returns on invested capital by buying distressed assets, partnering with experienced operators, and building large businesses through reinvestment of intellectual and equity capital, for both organic and acquisition growth.

The firm had a letter of intent to purchase a manufacturer to include as an add-on to its existing portfolio company. A principal of the private equity client contacted us and requested a full-scope financial due diligence engagement and report.

Riveron Approach:

Our team of two professionals was able to hit the ground running at the target’s headquarters, on extremely short notice. We coordinated with target executives and the investment broker to obtain information necessary to evaluate and support the historical and projected financial position of the business. In addition, our work focused on both a quality of earnings analysis and a working capital analysis. Initial findings were reported to our client through daily status meetings, and we thoroughly dissected other key issues identified. Our draft report was distributed to our client within the required timeframe, and a final report was issued to complete the engagement.

Benefit to Our Client:

We were able to identify key issues through our detailed review of balance sheet accounts and operational information, resulting in adjustments to EBITDA for the relevant period. This information armed our client with the necessary detail to validate the historical EBITDA run rate and successfully finalize the transaction with the target’s management.

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