Buyers, lenders and sellers involved in mergers or acquisitions must identify the risks and opportunities inherent in the business under consideration. Effective due diligence can help buyers and lenders structure strategic transactions and avoid costly mistakes. It can also help sellers better understand the strengths and weaknesses of their position pursuant to a deal.
HIRE Finance provides financial due diligence and transaction support services to buyers, lenders and sellers in a variety of transactional situations. We assist strategic and financial buyers to develop a complete picture of the target by assessing the quality of earnings and conducting integration assessments. We evaluate the earnings before interest, taxes, depreciation and amortization ("EBITDA") used for pricing purposes and identify any risks related to financial reporting nd the accounting environment.
We can also represent banks and other lenders on matters related to asset-based loans, including assessing collateral like accounts receivable and inventory, as well as evaluating cash flow.
BUYERS
Financial due diligence is important in identifying future growth opportunities as well as for negotiation purposes. HIRE Finance can focus significant investigative, analytic and financial skills on the strategic value of the target business.
We focus on items critical to the deal's success, including:
- Purchase price adjustments
- Abnormalities that skew earnings
- Adequacy of existing management and financial reporting
- Accounting issues affecting current and future earnings ("quality of earnings")
- Contingent liabilities
- Integration challenges
LENDERS
HIRE Finance's services can help lenders assess the supporting collateral as well as evaluate the reporting systems that produce the information. We analyze:
- Borrowing base certificates
- Dilution and other collection problems
- Inventory aging and obsolescence
- Cash forecasts and other projections
TRANSACTION SUPPORT
HIRE Finance customizes its approach to each transaction, because no two businesses are exactly alike. Some of our more common due diligence steps are:
- Understanding EBITDA and any unusual or nonrecurring transactions
- Evaluating financial trends
- Assessing accounting policies and procedures
- Reviewing financial reporting
- Assessing information and management reporting systems
- Evaluating key assets and their associated reserves or allowances
- Identifying unrecorded liabilities
- Determining loan covenant compliance
- Validating key assumptions and drivers to projections
- Understanding capital expenditure requirements
