Stout provided buy-side financial due diligence services to a private equity client and its portfolio company, a premier provider of sustainable water management for stormwater, wastewater, and water quality testing across the United States, related to the acquisition of an environmental services business focused on stormwater inspections, maintenance, and compliance. The deal broadened the client’s reach in key geographic markets and deepened expertise across various disciplines.

We supported the client through quality of earnings analysis, net working capital and net debt assessments, and other transaction support. The target’s books were reported on a cash basis, which required a bottom-up build of cash-to-accrual revenue recognition at the project level. Additionally, the frequent use of subcontractors on projects required a tailored approach to ensure monthly and project-level margins were representative of accurate trends in the business.

Our due diligence services helped support the client’s initial valuation, purchase agreement negotiations, and post-close integration planning through calculating adjusted EBITDA, identifying and modifying reported financials for deviations from U.S. GAAP, and other deal-critical insights.