Stout provided buy-side financial services for a private equity platform business in the construction space. The acquisition was for a mechanical, piping, and plumbing construction business that was focused in Michigan.

The Stout Financial Due Diligence team performed quality-of-earnings analysis, net working capital, and net debt procedures. The Stout team assisted with the detailed analysis of the percentage-of-completion method of revenue recognition, diligence on joint venture projects, and the assessment of the impact of cash versus accrual accounting.

As noted, the business recognized revenue under the percentage-of-completion method of accounting that was analyzed through a lookback analysis on jobs and a recasting of revenue, resulting in a significant adjustment to EBITDA.

Stout was involved throughout the process assisting the Buyer with items pertaining to the purchase agreement, rollforwards, and the net-working-capital peg. Additionally, Stout performed tax due diligence on the stock acquisition, and the work included key analyses around the expected S-Corp election, state and local tax filings, sales and use tax, and more.