Quality of Earnings
Quality of Earnings - Buy Side
Acquisitions can be important to your company’s growth strategy. Important to the success of the acquisition post closing is the transaction due-diligence. LCG can provide the crucial Quality of Earnings due-diligence including:
- Evaluate quality of earnings to justify/adjust target’s acquisition value. Identify carve-out adjustments and non-recurring items to adjust price.
- Understand key drivers of historical growth and profitability while identifying trends.
- Evaluate the quality of the target’s financial statements including consistency of accounting principles and validity of subjective estimates and reserves, and review working papers.
- Evaluate the reasonableness of target's projections.
- Evaluate working capital and CAPEX requirements.
- Review purchase agreements and provide deal structuring advice.
Quality of Earnings - Sell Side
When selling your company, the value you receive can be influenced by several subjective assumptions in addition to the financial reporting. LCG will help you maximize the price you receive and provide a creditable Quality of Earning Report to potential buyers through:
- Recognizing any potential unfavorable adjustments the buyer may present to seller based on profit and cash flow adjustments discovered during due diligence.
- Discover favorable adjustments to the seller that were previously overlooked to maximize the sales price.
- Assist the seller with preparing a credible financial report that will be highly attractive to potential buyers, which would include forecasting.
- Assisting in preparing financial statements that are compliance with accounting principles.
- Assist with the structuring of the transaction and reviewing the transaction agreements.