Stout provided sell-side financial and tax diligence services for a business unit carve-out of a middle-market, private-equity-owned consumer business. The divested business manufactures and markets branded and private label machines, tables, frames, and accessories for the home craft industry.

The Stout financial due diligence team worked closely with management in performing a quality-of-earnings analysis and carve-out of the divested business from the larger consolidated operation. Stout was involved throughout the process by assisting management, financial advisors, and legal advisors with buyer inquiries, net working capital peg, and purchase agreement review.

Since the business purchases product from international vendors, diligence work included analysis of the impacts of tariff changes, shipping delays, and freight rate ramp-up, as well as analysis of the impact of COVID-19 and supply chain issues on sales and operating expenses.

Stout also assisted with tax due diligence on the carve-out, including structuring to maximize value for the seller.