Transaction Support

During the transaction, Due Diligence is performed to uncover any potential risks. Accounting support ensures that financial records are accurate and maintained to comply with US GAAP, while federal and state Income tax projections provide an estimate of tax liabilities. Quality of Earnings Analysis assesses the sustainability of a company’s earnings before the transaction.

For each underlined step above, have the following:

• Due Diligence: This is a critical step in the transaction process, where a thorough examination of the target company’s financials, operations, legal matters, and market position is conducted. The goal is to identify any potential risks, such as undisclosed liabilities, contract issues, or operational inefficiencies, that could impact the transaction’s value or lead to post-closing problems. Due diligence helps buyers make informed decisions and negotiate better terms.
• Accounting Support: During the transaction, maintaining accurate financial records is crucial. Accounting support ensures that all financial statements comply with Generally Accepted Accounting Principles (GAAP) or other relevant accounting standards. This includes reviewing and possibly adjusting the financial statements to reflect the true financial position of the company. Accurate accounting is essential for building trust with the other party and ensuring that the financials presented during negotiations are reliable.
• Federal and State Income Tax Projections: Estimating the tax liabilities that may arise from the transaction is a key component of transaction support. These projections involve calculating the potential federal and state income taxes that could be triggered by the transaction, including the impact of different deal structures and financing methods. Understanding these tax implications allows both parties to plan accordingly and structure the deal in the most tax-efficient manner.
• Quality of Earnings (QoE) Analysis: The QoE analysis goes beyond the standard financial review to assess the sustainability and accuracy of the target company’s earnings. This analysis looks at factors such as revenue recognition practices, non-recurring expenses, and working capital trends. The goal is to determine whether the reported earnings are a true reflection of the company’s ongoing profitability or if they have been inflated by one-time events or accounting adjustments. A strong QoE analysis helps buyers understand the true earning power of the company and can influence the final purchase price.