Stout provided buy-side financial due diligence services for a private equity-backed, national HVAC and building controls commercial maintenance service provider. The acquisition target was an installation and service provider in the mid-Atlantic region that expanded the company’s geographical footprint in a specific market that was previously underserved.

Our Financial Due Diligence (FDD) team performed quality-of-earnings, job performance, net working capital, and net debt analyses while working closely with our client to confirm their initial valuation and supporting the closing of the transaction. Our FDD team focused on assessing normalized EBITDA through various analyses, including completing a percentage of completion lookback normalization, analyzing historical job performance and backlog trends, identifying impacts of converting from cash to accrual basis accounting, and evaluating headcount / employee compensation cost changes. We also assisted with the development of the working capital target and closing working capital exhibits, as well as reviewed key financial terms in the purchase agreement.

Additionally, we were engaged post-close to support our client with preparing a financial integration package, including a quality-of-earnings rollforward through the closing date, closing net working capital and indebtedness statements, and an opening balance sheet analysis.