Forensic Accounting Experts Perform Due Diligence for Business Transactions
Trustworthy analysis of businesses for mergers, acquisitions, and joint ventures
Over the decades, millions of Americans have been entertained watching some version of the TV game show, “Let’s Make a Deal!” Inevitably, a contestant faces a choice, let’s say, between keeping $500 or taking what’s behind Door Number 2. Whether the door hides a Cadillac or a potato sack is anyone’s guess. Now, if you were just visiting Burbank and hoping to shake the hand of Monte Hall, you might not mind going home in a burlap T-shirt. But if you are the CEO of a company looking to acquire a strategic business asset, you want to eliminate all guesswork. You need to know the precise value of the asset behind the door and have a reasonable estimate of its market potential over the next several years.
At North American Forensic Accounting, we understand how important making the right acquisition can be to your business development plans. We also know that getting stuck with a lemon can be disastrous. We apply our advanced training and decades of practical experience to conduct due diligence that reveals important insights, which enable prudent decisions. We dive deeply into reported financials to uncover the whole story behind the numbers. We are also adept at handling the human aspect of organizational evaluations, conducting revealing interviews to uncover pivotal details. With NAFA, there are no curtains, doors, or boxes standing between you and the information you need to make the best possible deal for your company.
Due diligence services warn companies of poor investments and uncover hidden value
The goal of transactional due diligence is to ascertain the precise value of an asset, so that business leaders can decide whether to make a purchase and at what price. To provide you with the reliable information you need, NAFA’s team will:
- Value the company —Owners of the target asset will present the most favorable valuation to leverage the highest price. We can critique their process to test its accuracy and perform our own calculation using an alternate method that might disclose weaknesses, which must become part of the buyer’s calculus.
- Quality of earnings reports — Buyers want a return on their investment, which requires the asset to perform at least up to current standards. Our NAFA team delves into revenue reports to determine whether earnings are likely to remain consistent. We might uncover vulnerabilities, such as heavy reliance on few clients, expiring contracts, supply chain challenges, and inordinate dependence on cyclical trends.
- Contract compliance audits — Along with testing the quality of earnings, NAFA tests the performance of existing contracts. Are these agreements conferring the full benefit of the bargain? Or has the company tolerated underperformance that has weakened its position? If unnecessary and preventable losses are coloring the valuation of an asset, NAFA’s pros will uncover the facts that can clarify the situation.
- Risk assessments — There are few things worse than acquiring a company that almost immediately becomes radioactive. You hoped this asset would enhance your portfolio; now it’s draining resources due to liability issues, scandal, noncompliance, or a toxic corporate culture you need to turn around pronto. NAFA makes prospective buyers aware of potential risks, whether they are financial, reputational, strategic, operational, or compliance based.
Engaging NAFA early in the process ensures that you have reliable information to guide your strategy. Clear, cogent data can help you decide whether the acquisition is worth pursuing and at what price. We might uncover disturbing facts that help you avoid a “poison pill” or reveal the hidden value of a “diamond in the rough.” Either way, you’ll have trustworthy data that empowers you to proceed with the utmost confidence.
Contact NAFA today to discuss due diligence for business transactions
North American Forensic Accounting performs due diligence for business clients considering mergers, acquisitions, and joint ventures. NAFA serves clients from offices throughout the United States, including in Philadelphia, Pittsburgh, New York City, Atlanta, Charlotte, Miami, and the Tampa Bay area. To learn more, call us at 347-286-4860 or contact us online to schedule an appointment.