Efficient Sale:
By clearly showing streams of value, due diligence was streamlined.
The transaction was executed with a tax efficient sale structure with $3 million in tax savings for the owners.
12x
EBITDA
Business was sold at over 12x EBITDA, over 30% above initial investment bank and client expectations.
3M
Tax Savings
The transaction was executed with a tax efficient sale structure with $3 million in tax savings for the owners.
The owners had founded the business, built technology, and run the company for over 15 years. They were very hands on, and the company had a very hard working, but small employee base. They wanted to sell the business but recognized how much work needed to be done and that the way the business looked on paper did not reflect the value to the market.
Key Results
Since Starting Work With Fintrepid
Identified add-backs to EBITDA
Converted from Cash to Accrual
Executed Balance Sheet Clean-Up
Developed GAAP compliant SOPs
Rebuilt gross margin methodology
Redesigned P&L Structure
Prepared supporting subledger schedules
Created sophisticated forecasts
The Fintrepid M&A Process
Fintrepid Solutions
- Converted financials from a cash basis to a modified accrual to more accurately represent business performance results, particularly in light of software contract revenue that skewed monthly results
- Leveraging best practices, clean up the balance sheet and income statement accounts and supporting ledgers and schedules to provide proactive clarity for due diligence
- Rebuilt gross margin methodology to more accurately reflect results
- Redesigned the structure of the P&L for improved buyer visibility
- Prepared supporting subledger schedules to substantiate material balances
- Identified and clearly presented add-backs to EBITDA in order to enhance value opportunity
- Developed and documented scalable processes and procedures, and documented the client’s application of critical accounting policies in accordance with GAAP
- Reviewed and modified the sales tax processes to ensure compliance
- Created, maintained and modified sophisticated forecasts
- Assisted in gathering and ensuring all corporate records were accurate and complete
- Reviewed material contracts and evaluated whether any existing terms would impact a transaction
- Performed onsite visits to assess physical state of operations and assets and worked with the client on necessary improvements
Strategic Leadership
Served as sounding board, another set of eyes, strategic voice at the table to support owners – both in a structured format and ad hoc as needed.
Go To Market
Assisted in the evaluation and selection of the company’s investment bank
Managed the Quality of Earnings process by providing initial diligence items, addressing follow up requests and conducting thorough reviews of the CPA firms work to ensure accuracy
Assisted in the creation of the investment bank’s Confidential Information Memorandum (CIM)
Managed the due diligence deal room for the client
Provide strategic guidance to client in the evaluation of letters of intent (LOIs)
Transaction Due Diligence
Prepared additional due diligence items as needed
Engaged as a primary point of client contact for buyers with additional requests and meetings
Coached the client through the due diligence process so that they could opine on critical items as needed, while maintaining their focus on operating the business
Buyer Evaluation
Provided guidance on buyer terms and the detail contained within
Worked side by side with the company’s tax CPA firm and prepared calculations on the tax impact of stock sale vs. asset sale terms, which resulted in the client negotiating the best possible terms
Acted as main point of contact between the buyer’s representatives and the client
Final Transaction
Maintained a detailed working capital analysis pre and post transaction, which resulted in an accurate working capital estimate minimizing a significant working capital true-up post-closing
Prepared final due diligence and pre-closing items, as needed
Reviewed and provided guidance on final legal purchase documents
Partnered with the tax CPA to ensure full visibility and an efficient tax structure for the transaction
Buyer transition Post-Close
Managed post-close reporting
Led financial transition and integration with buyer
Performed functions as requested by buyer to ensure smooth transition and integration
