Stout performed financial due diligence for a private equity-backed serial acquirer in the HVAC industry.

The acquisition target had significant long-term commercial installation contracts along with shorter-term residential installation and service contracts.

Stout performed extensive diligence procedures around the target’s revenue recognition. This was accomplished by aggregating revenue and costs by job (i.e., creating a jobs database) in order to perform a percentage of completion accounting “lookback” normalization including a detailed analysis to assess the current margin estimates on “open jobs”.

Through our rigorous due diligence at a detailed account level and thorough understanding the target’s systems and limitations, we identified multiple adjustments to the purchase price in our client’s favor. We also helped them in getting a head start on the integration of the target, which allowed for quicker monitoring of KPIs and financial reporting post-close.