Due Diligence

You've found an acquisition target. The business is a strategic fit and they are interested. Now you need to determine whether your target business is, in fact, what it appears to be. You need due diligence.

A fundamental aspect of the due diligence process is obtaining a clear understanding of an acquisition target's quality of earnings. Early analysis of the quality and sustainability of earnings enables efficient decision making and establishes reasonable and defensible baseline valuation measures. Working capital needs and cash flow implications of unrecorded liabilities, compensation plans, and future capital expenditures also need to be analyzed and understood.

Why MorganFranklin?

MorganFranklin provides the peace of mind that comes with an expert and detailed look into acquisition targets. Our coordinated and focused approach to M&A support provides accounting and operations analysis to help buyers evaluate potential acquisitions. We examine key assumptions, drivers, and potential pitfalls that may determine the success of purchases, and our technical transaction professionals move fast to evaluate targets' historical results, accounting assumptions, and methodologies. We take the process one step further by identifying opportunities for improved operational performance and potential post-closing cost savings.


Capabilities

  • Historical results sustainability evaluation
  • Non-recurring and one-time items
  • Run-rate impact of significant revenue and expense changes
  • Prospective changes in post-acquisition costs
  • Stand-alone cost issues
  • Trends and true-up of reserve, allowance, and provision accounts
  • Working capital and long-term asset needs
  • Interim vs. year-end accounting treatment
  • Discontinued operations or product lines
  • Private and/or public company expenses and related parties
  • Appropriate application of U.S. GAAP and IFRS

Impact & Value

  • Provide unbiased analysis
  • Assist in purchase price negotiations and modeling
  • Assess reasonability of management's forecasts
  • Identify opportunities for operations improvement and investment
  • Evaluate internal control effectiveness
  • Raise management's awareness of industry, operational, and financial risks
  • Build understanding of trends impacting historical growth and profitability