Quality of Earnings
A quality of earnings analysis is a crucial component of financial due diligence for acquisition or divestiture transactions, whether it is conducted by a private equity firm or a corporation.
The purpose of this analysis is to provide an in-depth evaluation of a company’s historical financial statements, accounting practices, and other financial information to determine the accuracy and reliability of reported earnings.
At Virtas Partners, we pride ourselves on offering customizable solutions based on your deal support needs, bringing deep industry insights and supporting complex and challenging transactions.
Buy-Side Quality of Earnings
Supporting private equity and public companies on platform and add-on acquisitions. Heavy emphasis on complicated and unique transactions including corporate carve-outs, targets with challenging financial data, limited scope engagements and required industry specialization.
Sell-Side Quality of Earnings
Supporting corporate divestitures, company sales and private equity exits. Our approach in teaming with the sell-side investment bank brings value to both the seller and the bank and results in increased speed to market, increased confidence in financial data, increased speed of buy-side due diligence and decreased time to close. Heavy emphasis on complicated and unique transactions including corporate carve-outs, targets with challenging financial data, limited scope engagements and required industry specialization.
Carve-Out Support
Corporate carve-outs are always complex. From small, non-core divestitures to multi-billion dollar public company spin-offs the creation of carve-out financial information can be a complicated, data intensive exercise that should not be underestimated. In these transactions, we deploy a team of deep carve-out specialists to prepare all the financial information needed to complete the divestiture from core financial information upon which quality of earnings will be performed to stand-alone financial statements going into an SEC filing.
Industry Analysis
We incorporate in-depth industry analysis including insights into market trends, opportunities, risks, leading practices and target operating models.
Working Capital Analysis
Understanding working capital requirements is critical in building valuation models and negotiating a transaction. Our analysis will explain the key drivers and trends of working capital for the business to develop key assumptions for future working capital requirements and set the working capital peg to be included in the sale and purchase agreement. We continue to support the closing statement and negotiation of the net working capital adjustment post-close.
SPA Support
Our team has supported the negotiation of hundreds of sale and purchase agreements. Our deep experience in this area allows us to assist our clients in the areas of working capital, earn-outs, pre and post close covenants and representations/ warranties and related disclosure schedules impacting transaction value, financial adjustments, integration and operational separation.
Negotiation Support
We support our clients in negotiations throughout the deal life-cycle from signing to close.