Quality of Earnings & Finance Transition for Logistics Brokerage

Virtas Partners was engaged by a Private Equity firm to support with evaluating a potential acquisition by performing a quality of earnings (“QoE”) analysis and transition the finance function after closing the transaction. 

Client Background

Our Private Equity firm client had signed a letter of intent for the purchase of a small U.S Customs brokerage and logistics company for a designated price. Our client needed an advisor to review the financial information provided by the target company and deliver a report on the quality of the target’s historical earnings, major accounting policies, management adjustments to EBITDA, assets and liabilities, and working capital. In addition, our client needed a referral for tax due diligence resources to assist in due diligence, and fraction CFO/Accounting services once the transaction was closed.

Scope of Services

  • Analyzed the historical financial statements of the Target including trend analysis, significant accounting policies and management adjustments to EBITDA 
  • Identified additional EBITDA adjustments 
  • Delivered a Quality of Earnings report 
  • Provided a referral to qualified tax due diligence firm and coordinated tax due diligence requests
  • Performed finance function assessment and built finance transition plan 
  • Executed working capital adjustment and negotiation 
  • Assisted in completion of opening balance sheet and audit of stub period

Significant Milestones

  • Ability to identify additional adjustments to EBITDA not already identified by management 
  • Swift turn around and delivery of QofE report within tight timeline 
  • Assessed finance organization needs and built plan for transition 
  • Completion of critical post close activities including the audit and working capital adjustment Significant Milestones

Value to Client

  • ​Independent confirmation of financial statements provided by the Target 
  • Negotiated working capital target and post close adjustment 
  • Completed first audit and transitioned finance organization fit to new ownership and management needs