06.16.16

Sell-side Due Diligence and Carve-out Assistance for a Fortune 500 Company

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BUSINESS ISSUE

A Fortune 500 company planned to divest a legacy, heavily integrated business representing approximately 10% of the company’s revenues. The carve-out would comprise of several distinct but related businesses, creating a need for individual stand-alone models for each business as well as consolidation of the entire group. Riveron was engaged to perform sell-side due diligence and financial modeling for the proposed carve-out.

RIVERON APPROACH

Riveron began by streamlining the data collection process of all in-scope P&Ls and associated sales metrics. Using this data, our team directed meetings with key executives to develop an understanding of the various businesses, operations, and interconnectivity between the entities. Riveron then compiled detailed historical income statements and supporting schedules of the recast proforma businesses, both on an individual and consolidated business level, to provide the company flexibility during negotiations.

Riveron also performed sell-side due diligence, identifying non-recurring and other quality of earnings adjustments. Working with management, Riveron developed detailed forecast financial statements for the upcoming six years. Risks were highlighted and communicated to the transaction leadership committee and company executives. Lastly, Riveron assisted the company throughout the buyer Q&A process and clean-team sessions with questions related to the proforma models.

BENEFIT TO OUR CLIENT

The development of the detailed, complex historical and forecast models required a significant amount of data mining and manipulation as well as a thorough understanding of the underlying businesses. Riveron’s knowledge and expertise allowed for the creation of straightforward, dynamic financial models. These models successfully led the Client through the negotiation process and the company sold the consolidated businesses at approximately 8 times the proforma EBITDA.

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