Virtas Partners was engaged by a records retention and destruction company to provide a Cash to GAAP conversion for 10 legal entities.
Client Need
A privately held company under LOI to be acquired by a private equity firm faced a critical barrier: its books and records were not GAAP compliant, preventing the buyer from initiating financial due diligence. The company lacked the people, processes, and technology required to reconstruct historical financials across 27 months, spanning 11 bank accounts and 10 legal entities. Historical records were incomplete, inconsistent, and maintained on a cash basis, creating significant uncertainty around revenue, expenses, liabilities, and asset values. The transaction was at risk unless the company could rapidly produce accurate, GAAP ready financial statements.
Tailored Solutions
Virtas deployed a cross-functional team combining technical accounting, data analytics, and automation to reconstruct the company’s financials and prepare it fordiligence.
- 1. Reconstructed Historical Financials
- Performed a comprehensive proof of cash across 11 bank accounts to ensure all cash activity was recorded accurately
- Conducted a proof of payroll to validate proper allocation of labor costs across entities
- Created amortization and depreciation schedules for ~50 previously unrecorded assets
- Identified and recorded liabilities for multiple loan agreements, including short – and long-term components
- 2. Built Automation Enablers
- Developed tools to ingest PDFs of bank statements, credit card statements, and payroll registers
- Automated extraction and matching of transactional data to ledger activity
- Reduced manual effort and improved accuracy of historical reconstruction
- 3. Delivered GAAP Compliant Financials for Diligence
- Identified departures from GAAP and prepared correcting journal entries
- Updated trial balances across all entities
- Supported the CFO in importing updated financials into a new ERP instance
- Extended the lookback period by an additional quarter at the buyer’s request
Value to client
- Enabled the buyer to initiate financial due diligence by delivering GAAP-compliant, audit-ready financials
- Reconstructed 27 months of historical activity across 10 entities with speed and accuracy
- Add a roll-forward of all analyses for an additional 3 months quickly
- Improved financial reporting integrity and established a foundation for future audits
- Reduced manual workload through automation of data ingestion and matching
- Supported a smooth transition to a new ERP system, improving long term scalability
Capabilities
- Controller support
- Financial Analysis and Data Analytics
- GAAP Conversion
- Quality of Earnings Preparation
- Ai and Machine Learning Solutions
- Financial Reporting
- Data Harmonization
- Technical Accounting