Stout provided buy-side financial due diligence to a private equity-backed platform as part of its second acquisition in a residential and commercial roofing roll-up strategy. The target, based in Northern California, was a founder-led business with a limited back-office function and minimal financial reporting. Despite having annual revenues greater than $20 million annually, the management team only operated on a personal finance software with no balance sheet and limited data. 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 owner compensation, conversion of revenue and material purchases from cash-basis to adjust to the install-date, implementation of payroll accruals, and more.

In addition to standard QoE procedures, Stout assessed synergy opportunities related to vendor material rebates and insurance program consolidation. Our work helped the client gain confidence in the target’s earnings profile and streamline the acquisition process.

Further, the Stout tax team began assisting in tax structuring support to minimize tax burdens and evaluate transfer pricing impacts.