Buy-side Due Diligence For Middle Market Private Equity Firm

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Business Issue:

Riveron served a private equity client who pursues investment opportunities across several industry sectors. Its management team focuses on companies with revenues between $20 million and $150 million, which require equity capital for a variety of reasons, including management buyouts, recapitalizations, and growth, among others. It had a proven track record of successfully investing in small and mid-sized companies in a wide variety of industries, including business services, consumer products, and manufacturing.

Our client had a letter of intent to purchase a multi-unit retailer with $100 million in sales, as an add-on acquisition for an existing portfolio company. The deal leader contacted us at the end of the week and requested we provide full-scope financial due diligence, with an accompanying report.

Riveron Approach:

With a short timeline to deliver our initial findings, our team of three professionals was able to hit the ground running at the target’s headquarters on Monday of the following week. We coordinated with target executives to obtain information necessary to evaluate and support the historical and projected financial position of the business. Our due diligence efforts focused on a full operational review, identifying key risk factors and operational metrics, plus analyses of forecasts, the balance sheet, and working capital. Initial findings were reported to our client through daily status meetings by conference call, and we further investigated additional key issues identified. Our draft report was used to assist in final deal negotiations and the accompanying deal structure, and a final report was issued to complete the engagement and financing with the lender.

Benefit to Our Client:

We were able to isolate certain issues through our detailed review of balance sheet accounts, resulting in pro forma adjustments to EBITDA for the relevant period. In addition, we highlighted certain areas of ongoing financial and operational risk. Our client used these findings to assist in final deal negotiations and deal structure, and to define areas of post-transaction focus.

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