Stout’s client, a leading industrial supplier of goods and services to the commercial and government sector, needed to get an acquisition right. If executed successfully, the deal would function as a major strategic bolt-on acquisition for our client’s long-term growth.
But the deal presented a multitude of complexities: diligence when dealing with businesses in the U.S. and Europe, uncovering financial reporting and tax structuring challenges, all under a heightened compliance requirements for security risk given their work with government entities.
Seeking confidence that the deal would be executed correctly, the company engaged Stout to provide a comprehensive suite of M&A services, including due diligence, tax structuring, and post-close integration work.
Stout’s Solution:
Stout tailored an approach to due diligence to align with our client’s strategy and value drivers for the acquisition, integrating financial due diligence, tax structuring and due diligence, and IT and cybersecurity due diligence into a single solution. Throughout the project’s lifecycle, our team of senior-level professionals with deep industrials experience provided a high-touch service focused on outcomes that would support the acquisition strategy.Additionally, work performed by Stout included post-close integration, technical accounting and valuation, and employee retention credit remediation. As a result, our client successfully completed the acquisition.
Client Benefit: Company Selects Stout for a Suite of M&A Services
In lieu of working with a multitude of due diligence and integration service providers, our client chose to benefit from using a single firm, Stout. Here’s how it helped.
Senior-Level Engagement
Our senior-level talent brought both buy- and sell-side expertise and sector-specific knowledge. Even better, with a comprehensive M&A approach, that senior-level talent consistently collaborated on the backend. They applied their experience in every discussion with our client, offered guidance on navigating crucial issues, and provided candid feedback and specific guidance.
After we completed the due diligence, key Stout professionals remained actively involved in integration planning to ensure a cohesive transition from diligence into integration, preventing any drop-off of knowledge or information.
Convenience and Efficiency
Stout offered our client a comprehensive, end-to-end diligence solution. We approached the engagement holistically, intentionally avoiding any segmenting of tax, finance, or IT/cybersecurity.
This meant our client did not need to worry about managing different firms with differing operations, formats, and deliverables, or work to ensure those differing firms cooperated effectively.
With so much of the communication and project management housed in our internal communication and workflow, Stout enabled seamless handoffs and high levels of collaboration throughout the due diligence and integration work. When our client shared information with one Stout professional, they knew the information would reach all other relevant Stout team members.
Additionally, we helped transition the acquiree to public company standards, ensuring compliance with Fortune 500 reporting standards and management controls. This included facilitating the practices for sales and operations planning, sales forecasting, financial and management reporting.
Our accounting and reporting advisory team developed a 100-day post-close plan to guide the acquiree on the path to public company financial reporting compliance. We also assisted in enabling quarterly reporting for investor relations.
In addition to performing tax due diligence, our tax team advised our client on structuring the transaction. This involved outlining potential transaction structures and building a model to quantify the estimated benefits and costs to our client of pursuing a tax basis step-up transaction.
Our client ultimately decided to utilize the F Reorganization structure recommended by the tax team because it created a “win-win” scenario for both parties, providing material net present value to the company due to the basis step-up while providing the seller with increased after-tax cash proceeds.
Successful Outcome
Our comprehensive M&A solution allowed our client to successfully execute the transaction, maximizing deal value and avoiding administrative headaches in the process. With the deal complete, our client is now working with Stout to integrate the acquiree, setting the company up for long-term success.