Stout provided buy-side financial due diligence to a private equity firm and its portfolio company evaluating the acquisition of an energy market intelligence and advisory business. The company provides subscription-based market data, research, and analytics, along with consulting and advisory services and industry conferences and educational events.

Our work included quality of earnings, revenue and recurring revenue analysis, net working capital, and net debt assessments. The company historically maintained its financial records on a cash basis, requiring Stout to analyze the appropriate timing of revenue and expenses across its subscription, consulting, and event-based offerings. We developed accrual-oriented adjustments for subscription revenue recognized over service periods, consulting revenue based on the timing of service delivery, and conference revenue and costs based on event dates. We also analyzed customer retention and recurring revenue trends, related-party activity, compensation and occupancy costs, prepaid expenses, deferred revenue, and accrued liabilities to develop a normalized view of earnings and closing working capital. The output of these analyses allowed the client to underwrite EBITDA and provided key information for the purchase agreement and post-close integration.