Stout provided buy-side financial due diligence to a national residential and commercial roofing group as part of its network expansion of contractors across the U.S. The target, based in Minnesota, was a founder-led business with very limited back-office support and minimal financial reporting.

During our work, we navigated multiple sets of financial records maintained by both internal accounting and an external CPA and an external project-based sales system which lacked an underlying detailed composition of costs and the ability to reconcile cleanly to the financials. Our team leveraged our experience with less-sophisticated sellers to drive an efficient process and focus on the core drivers of the business.

Our team conducted a quality-of-earnings analysis focused on normalizing earnings despite limited historical data and non-standard accounting practices. We worked closely with the sellers to focus our assessment on drivers, including recasting revenue and costs to better align with completion dates utilizing the sales system, normalizing bad debt expense, owner compensation, and more. Our work helped the client gain confidence in the target’s earnings profile and streamline the acquisition process within a quick time frame.