Making the decision to buy a business is the most critical decision a private equity fund faces, as the decision will have long lasting implications on the fund’s performance. While there are significant benefits to a merger or acquisition, there are also serious risks and uncertainties that need to be identified. Due to the far-reaching ramifications of such decision-making and the complexity of merger and acquisition (M&A) transactions, it is imperative that such transactions be advised upon by experienced professionals dedicated to the M&A process.
Anchin’s Transaction Advisory Services group approaches financial and tax due diligence with a dedicated team experienced in M&A transactions. This team is supported by a tax department with over 100 professionals and an overall accounting firm with approximately 350 professionals. Experts within our dedicated industry groups have a wealth of intellectual capital to draw upon to give our clients a clear understanding about the companies they are acquiring, which enables Anchin to help our clients minimize their risks.
When Anchin performs due diligence, you receive senior-level, industry specific support from a dedicated group of M&A professionals.
With a special focus on middle market transactions, our integrated team of financial and tax transaction specialists takes a multidisciplinary approach drawing from our in-house industry experts. Anchin’s Transaction Advisory specialists maintain experience across a multitude of industries, including, among others:
- Business Services
- Consumer & Industrial Products
- Food & Beverage
- Fashion & Apparel
- Manufacturing & Distribution
- Professional Services
- Public Relations & Advertising
- Transportation & Logistics
Financial and Accounting
We will provide you with clear insight into the target’s historical financial performance, as well as assist in testing the assumptions and sensitivities related to its forecasted and projected results. Anchin’s dedicated industry groups enables our professionals to look beyond the numbers to understand the risks involved with an acquisition.
Our experts tailor the scope of work for each transaction to focus on the key risks and sensitivities that are important to you. While the ultimate scope of work will be based on the target and feedback from our clients, the following steps are typically performed:
- Evaluation of the financial performance and run-rate quality of earnings
- Evaluation of the quality of assets, working capital requirements and indebtedness
- Analyses of operational data utilized by target’s management to run its business in order to gain an in-depth understanding of the drivers of financial performance
- Analyses of key customers and/or products as to performance, trends, concentration, profitability, etc.
- Analyses of profitability of lines of businesses, including price-volume analysis
- Read significant agreements and contracts with customers and vendors and analyze the impact on the business
- Vetting of the company’s budgets and/or projections
- Evaluation of any other information or documents that could impact the financial performance of the target such as employment agreements, leases, contracts, revenue back-log, legal invoices, etc.
- Identify weaknesses within the financial reporting process and provide recommendations on how to improve upon such weaknesses
- Comment on financial and accounting sections within the purchase agreement
Our tax department will determine if the company properly filed its taxes in a timely manner and with the proper jurisdictions. We will also check for substantial discrepancies. Once the taxes are properly accounted for, we will be able to tie potential tax liabilities or benefits into the overall deal structure.
The following steps are typically performed during tax due diligence. These steps will result in the development of the most advantageous tax strategy for the company that you are contemplating acquiring:
- Review of the tax filings and other tax issues relating to the specific business and its operations
- Review of payroll tax filings and compliance and evaluation if additional filing requirements are necessary
- Review of sales tax filings and compliance
- Review of income tax filings and evaluation of tax positions taken as well as other options that may be available for reducing income taxes
- Evaluate if filings may be required in other state or local tax jurisdictions
- Review of prior tax examinations and impact on future operations
- Review of the classification of individuals working for the target as employees or independent contractors
- Other matters that may require additional filings
- Analysis of the various structuring opportunities available given the contemplated acquisition