Diligence Case Study 2
Purchase Price Reduction Resulting from EBITDA Diligence Adjustments and Working Capital Shortfall
Client
Private Equity Owned Strategic Acquirer
Industry
Construction & Demolition Waste Hauler; Transportation
Buyer’s Transaction Objectives
A synergistic add-on to platform company — EBITDA growth, multiplier increase, resulting in higher valuation; geographic expansion, service line additions, and revenue diversification, resulting in reduced operational risk.
Seller’s Transaction Objectives
Recapitalization; exit strategy.
Target Characteristics
Family-owned; steady growth; highly profitable; represented by excessively aggressive, highly invested and unethical broker.
Assignment
Based on EBITDA multiple.
Transaction Pricing
Based on revenue target (an implied EBITDA multiplier), including earnout contingent on future revenue thresholds.
We Preserve Value and Reduce Risk of Loss
Our depth of knowledge, experience, and expertise facilitate the successful and quick close of transactions when warranted. But, we have also surfaced risks, issues, and concerns – even including fraudulent accounting and financial reporting. Without question, value has been preserved and loss was prevented by our proactive identification of those “deal breakers.” When performing meticulous and comprehensive financial and business due diligence that is well beyond the routine, or in offering independent and objective transaction advisory services, or in post-merger integration and implementation assistance, Avant® always provides value.
