Sell-Side Financial Due Diligence

PRIMARY CONTACTS: Joel Rosenthal CPA, CVA (Pittsburgh), Marc Brdar CPA, CFF, CIA (Pittsburgh)

It has been said that “Luck favors the prepared.” It has also been said that “Luck is where opportunity meets preparation.” What if that’s true? In the Business Advisory group here at Schneider Downs, our experience supports these claims. We have found that companies in the market to sell who have subjected themselves to rigorous sell-side financial due diligence have had better success in closing deals than companies that have not.

Delays and discrepancies can quickly escalate a buyer’s anxiety, opening the door for negotiations to become contentious and possibly even fall apart altogether.  Allowing our team to come in and perform a quality of earnings analysis along with other procedures as a part of sell-side financial due diligence process, will help prepare you to navigate the landscape of the negotiation process, while increasing your credibility and the buyer’s confidence in you; two factors that only benefit you.

Key advantages of investing in sell-side financial due diligence include, but are not limited to, the following:

Accurate Valuation of the Company

A seller needs to project an accurate picture of the company’s financial results, including pro forma adjustments supported by data and/or documents that can be verified by the buyer. By undertaking sell-side financial due diligence, our team will work to discover potential unidentified earnings adjustments that can increase the company’s valuation, resulting in more money in the seller’s pocket.

Reduce Concerns of the Buyer

When the reliability of financial information and/or data provided by the seller is at question, buyers can quickly lose confidence and interest. This often increases the buyer’s concerns around the viability of the business, and decreases the buyer’s perceived value of your company.  Sell-side financial due diligence will provide the opportunity to assure that your data and financial information are both accurate and consistent, eliminating errors and possible fears.

Minimize Surprises

Sell-side financial due diligence will not necessarily identify every single potential problem or question involved in a deal, but it should address the most significant issues, so that a deal does not dissolve because of unforeseen but preventable issues.  It is better to identify and address these concerns through sell-side financial due diligence than to allow for both the seller and buyer to be surprised when concerns arise with only days left in the exclusivity period.

If you are considering selling your company, we highly recommend performing sell-side financial due diligence prior to marketing your company.  We understand that, for the seller, successfully exiting a business is just as important, if not more important, than starting and growing it.  It’s the trophy at the end of the championship season.  We can help prepare you for success and your desired outcome.

Schneider Downs has extensive experience in providing buy-side and sell-side due diligence services.  Please contact Joel M. Rosenthal or Marc P. Brdar if you would like to get more information.