Stout provided buy-side financial due diligence services for a Fortune 500 company that distributes heating, air conditioning, and refrigeration (HVACR) products. The acquisition target was a distributor with multiple locations in the Southeast and Southwest that expanded the company’s distribution network and product offering.

Our Financial Due Diligence (FDD) team performed a quality-of-earnings, net working capital, and quality of net assets analysis while working closely with the company. The Stout FDD team focused on analyzing normalized EBITDA, including sales and margin analysis by customer and product, assessing inventory valuation and excess and obsolete reserve policies, identifying deviations from GAAP and potential implications to earnings, and eliminating intercompany / related party activities.

Additionally, our FDD team was able to efficiently and effectively aggregate multiple sets of disparate financial information in order to create a consolidated dataset that, in addition to being used for our buy-side due diligence, was also leveraged by our client to perform various analyses, including an inventory valuation analysis in order to identify and evaluate the value of product/SKUs the company already had in its product portfolio.