Provided diligence to PE firm acquiring an automotive parts distributor
Provided diligence to PE firm acquiring an automotive parts distributor
Stout provided buy-side financial services for a private equity platform business in the automotive industry. The acquisition was for an automotive parts distributor, which has 21 locations throughout New York City and surrounding areas.
The Stout Financial Due Diligence team performed quality-of-earnings analysis, net working capital, and net debt procedures. The Stout team assisted in various analyses, including understanding the impact of core accounting, inventory costing methodology, assessment of the pro forma impact for terminating a service line that will not continue post-transaction, purchasing and rebate synergies, and more.
As the acquired target opened several new locations during the historical period, the Stout team analyzed historical performance and inquired on the prospective profitability on select locations. Stout was involved throughout the process, assisting the buyer with items pertaining to the purchase agreement, which included post-acquisition earnout terms, net working capital peg, and indebtedness. The quality-of-earnings was crucial to the valuation process for the client and earnout terms negotiated.
Additionally, Stout performed tax due diligence on the stock acquisition, including key analysis and support around the F reorganization structure, equity sale / rollover equity impact, employee classification, S-corp qualification, and more.
Post-diligence, Stout’s Business Valuation service assisted the company in the purchase price accounting of the opening balance sheet through valuing the earnout, customer relationships, inventory, and more.