Transaction Advisory Services

Sell-Side Financial Due Diligence

Performed before taking your business to market, sell-side diligence helps document critical financial upside items and exposures before buyers begin their review.

• Prepare your business before going to market
• Document key financial upsides and exposures
• Support valuation discussions
• Improve speed to close
• Provide invaluable expert financial support for investment bankers or brokers
• Apply buy-side diligence techniques in advance of a sale process

Buy-Side Financial Due Diligence

Generally beginning after a letter of intent is signed, buy-side diligence helps buyers evaluate earnings quality, financial trends, operational risks, and the financial position of the business being acquired.

• Assess monthly EBITDA of the business you are planning to acquire
• Assess revenues by client and service line
• Review gross margin and direct costs
• Document employee compensation and benefits
• Determine fixed operating costs at the vendor level
• Assess inventory, receivables, payables, and accrued liabilities
• Prepare diligence reports for lenders, co-investors, and other third parties

Closing Date Net Working Capital Advisory

Most business transactions involve a Closing Date Net Working Capital balance, often referred to as the NWC Peg. Generally speaking, this represents the balance of current assets (inventory, A/R), less current liabilities (trade A/P and accrued liabilities), that the seller agrees to transfer to the buyer at closing.

After closing, buyers commonly assess whether the seller delivered a shortfall or overage. Differences from the original NWC Peg can result in dollar-for-dollar adjustments to purchase price.

• Calculate the NWC Peg on behalf of seller or buyer
• Educate counterparties as to proposed NWC Peg
• Assist with post-close NWC disputes between buyer and seller
• Assist counsel in drafting NWC provisions of the Purchase and Sale Agreement

General Business Transaction Consulting

For business owners and deal professionals who need experienced financial guidance, 712 provides general consultation related to the purchase or sale of a business.

• Evaluate transaction readiness
• Help clarify transaction questions and next steps
• Provide practical guidance during acquisitions or divestitures
• Support conversations with lenders, co-investors, attorneys, and advisors

Purchase and Sale Agreement Consultation

712 assists your transaction attorney with critical GAAP accounting expertise, helping ensure key financial terms are properly defined, with expectations being clearly documented in your PSA.

• Consult on financial provisions of the PSA
• Provide Closing Date NWC exhibits, accounting methodologies and related definitions
• Help clarify financial definitions and purchase price adjustment mechanics
• Provide consultation regarding key definitions and review the Closing Date NWC adjustment mechanism