Financial Due Diligence and Quality of Earnings: A Multidiscipline Approach (On-Demand)

$169.00

In the context of transactions, surprises are rarely good.  Due diligence provides peace of mind for buyers (and sellers), minimizing the chance of a surprise.  The presenters will provide a multidiscipline perspective (accounting, investment banking, and business valuation) of the financial due diligence process and how the results of the analysis can be leveraged in negotiating deal pricing, structure, and terms.  You will hear real-world examples from the presenters’ experiences conducting and analyzing financial due diligence reports.

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Event Details

Course Type

Original Date Of Course

Course Instructor

Dana Holmes, MBA, CVA, MAFF, CEPA, Joshua Hedrick, MBA, CVA, Ryan Myers, CPA, CFE, CGMA

General Credits

2

Course Description

In the context of transactions, surprises are rarely good.  Due diligence provides peace of mind for buyers (and sellers), minimizing the chance of a surprise.  The presenters will provide a multidiscipline perspective (accounting, investment banking, and business valuation) of the financial due diligence process and how the results of the analysis can be leveraged in negotiating deal pricing, structure, and terms.  You will hear real-world examples from the presenters’ experiences conducting and analyzing financial due diligence reports.

Principles

  • Timeline of a transaction
  • Purpose of transaction due diligence
  • Overview of transaction due diligence
  • Components of financial due diligence
  • “Quality earnings” and the impact on value and price
  • Quality of earnings reports
  • How to use a quality of earnings study
  • Transaction litigation – consequences of failure to complete due diligence
  • Importance of a multi-discipline approach to financial due diligence

Syllabus

  1. Timeline of a transaction
  2. Purpose of transaction due diligence
  3. Overview of transaction due diligence
      • Legal due diligence
      • Operating due diligence
      • Market due diligence
      • Accounting/financial due diligence
  4. Components of financial due diligence
      • Buy-side
      • Sell-side
  5. “Quality earnings” and the impact on value and price
  6. Quality of earnings reports
      • What is a quality of earnings report and what is it not?
      • Understanding the transaction and management motivation
        • Deal structure considerations
          • Asset deal
          • Equity deal
        • Transaction funding
        • Relevant time period
        • Industry and management specific metrics
  7. Coordination and collection of documents
        • Data room management
        • Data and document tracking processes
  8. Considerations
        • Assessing seller adjustments – discretionary expenses
        • One-time expenses
        • Division, product, or segment breakouts
        • Synergistic adjustments
        • Proforma taxes, capital structure, overhead costs
        • Determination of fixed vs. variable costs
        • Analysis of projections including scenario analysis
        • Corrections of errors/timing issues
        • Adjustments to noncash transactions
        • Tax implications
        • Fixed asset analysis
        • Transaction funding analysis
  9. How to use a quality of earnings study
  10. Transaction litigation – consequences of failure to complete due diligence
  11. Importance of a multi-discipline approach to financial due diligence

Instructors

Dana Holmes, MBA, CVA, MAFF, CEPA

Ryan Myers, CPA, CFE, CGMA

Joshua Hedrick, MBA, CVA

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