Working Capital Analysis and Purchase Agreement Assistance

We assess the accuracy of Management’s projections and working capital requirements by analyzing the reasonableness of their assertions, any impact in changes to key assumptions, the timing and the quality of projected future revenue streams and their plans to support future business operations. We provide support based on our findings and assist our clients’ legal advisors in drafting financial and accounting sections of the purchase, sale or debt agreement in an acquisition or refinancing.

Our analysis may include procedures such as:

• Analyzing historical trends and discussing significant fluctuations in key balance sheet accounts (e.g., accounts receivable and payable, inventory, prepaids and accrued expenses, etc.) and the impact of non-recurring items included within current and prior reporting periods
• Assessing the adequacy of reserves for accounts receivable and inventory Understanding the target’s accounting policies and consistency in the application of GAAP to determine if changes will impact working capital
• Assessing the impact of contractual arrangements on financial statements, particularly key customer and vendor agreements
• Inquiring as to contingent liabilities, off-balance sheet items and related party transactions
• Analyzing cyclicality of the target’s business and resulting impact on working capital needs
• Analyzing deferred revenue to better position our clients for negotiations related to cash to be left in the business at closing