The Private Equity Industry Outlook is Strong. Our Team Is Here to Support Its Growth.
According to research, an estimated 10,000 baby boomers are retiring every day. A good portion of these retirees are business owners. In fact, according to Forbes, 86 percent of middle market, privately held companies could make a generational transfer in the near future. This increase in sell-side activity will create huge opportunities for private equity firms. Whether it’s a sell-side or buy-side transaction, the Brown Smith Wallace Private Equity Industry Team is ready to help private equity firms meet the impending demand while improving the investment value of their acquisitions and divestitures.
Private Equity Expertise
Our team works with over 20 private equity firms and portfolio clients across a number of industries with revenues ranging from $10-$300 million.
Our experts have deep experience working in private equity owned organizations and performing transactions for public companies. Many of our Top 100 firm team members also have Big Four experience. We’re able to offer many private equity firms the same services of comparable quality, but at lower costs, further enhancing the value of the transactions for the private equity firms we work with.
In addition to our transaction experience, many of our professionals bring corporate or other prominent organization experience as leaders of a variety of specialty practices at our firm, including: IT advisory, international tax, litigation support, construction audit, cost segregation, captive insurance advisory, insurance consulting, property tax and health care.
How We Add Value to Buy-Side and Sell-Side Transactions
Our buy-side and sell-side transaction services are performed during the due diligence phase of the acquisition or exit process where we’re able to cut costs and reveal issues that might lead to a different acquisition or exit outcome than previously expected. Our process includes:
- Perform a Valuation for Acquisitions and Exits: Perform a professional valuation on the target business, factoring in synergies under a “future state” scenario, taking into account the current status of the industry and new company positioning. When selling, our ultimate goal is to help our private equity clients maximize the sale price of their transaction. Performing a valuation is the first step in accomplishing this. Valuations help the seller understand the value of the business and value drivers.
- Devise a Transaction Tax Strategy: Tax planning experts can set up a favorable tax structure or strategy prior to the transaction that can result in material tax savings going forward. Our transaction tax experts perform analysis to compare different organizational structures of the transaction and outline the benefits to the buyer and seller for each structure. On the sell side we prepare an after tax cash flow analysis to show the potential cash flow after taxes under different transaction structures.
- Perform a Quality of Earnings Review for Acquisitions and Exits: This is a comprehensive due diligence review of the target company’s industry, financial statements and business practices. We develop a report that clients can use to obtain outside financing or Board approval for the transaction. Our due diligence can provide support for renegotiating the purchase price in the final purchase agreement or support for abandoning the transaction due to risks previously unknown at Letter of Intent consummation. Conducting a quality of earnings review is just as important for sell-side transactions, because surprises can derail a sale. Our proactive, quality of earnings review may help uncover issues that can be addressed prior to a buyer conducting its own due diligence. This can also include the preparation of accrual based financial statements and projections. Sell-side due diligence also helps to get to a quicker close with less disruption to the business during the diligence process.
- Conduct a Risk Assessment for any Acquisition Target: Our comprehensive review includes systems, quality controls, environmental risks, operational deficiencies, etc. These may be overlooked in closing the deal, but they ultimately become the new owner’s problem.
- We Help Select Investment Bankers and Transaction Attorneys to Sell the Business: We’ve partnered with a number of our clients’ advisors to devise a strategy to market their businesses to help increase the final sales price. We frequently work with investment bankers and transaction attorneys to close the deal.
- Perform Post-Closing Services: Our post-closing services include auditing the closing working capital peg, purchase price allocation and intangible valuation, assisting with bookkeeping transitions, and assessing systems and operational process migrations, along with all the traditional audit and tax services.
Contact us today to learn how The Firm for Growth can assist your private equity firm.
Brown Smith Wallace is more than just our accounting firm – they have been a trusted business partner for more than 10 years. They have guided us through many changes and significant growth. When we were first purchased by a private equity investor, we needed a firm that could ask the right questions to help guide us through the transition. Brown Smith Wallace earned our respect with that transition and continue to make us think about and consider different aspects of our business decisions; we have good, challenging discussions that ultimately make our business stronger. We have worked with Brown Smith Wallace through 10 bolt-on acquisitions. The firm’s deep manufacturing industry knowledge and buy and sell-side experience makes them an invaluable partner. They also helped us through recapitalization with our second private equity owner and they continue to be our trusted advisor today.
Jamie Reuter, CEO
The executive team at our portfolio company in St. Louis asked that we use the Brown Smith Wallace Transaction Advisory team to conduct financial due diligence on one of their small add-on acquisitions. We had typically used a Big 4 firm for accounting due diligence. The professionals at Brown Smith Wallace did such a thorough job identifying issues and risks that were not identified during the letter of intent (LOI) process that we now use them on all add-on transactions for this portfolio company. They also handle all the intangible purchase accounting needs at these companies. Brown Smith Wallace does a great job learning the business before they perform due diligence and work extremely well with the seller. They are able to reassure the seller that we are a great firm to sell their privately owned business to and continue on with an ownership stake.
Karen Winterhof, Vice President
We interviewed several accounting firms when setting up our private equity firm. We ultimately chose Brown Smith Wallace because of their experienced team of transaction and tax advisors that have both private equity and public company experience. The transaction advisors at Brown Smith Wallace worked well with our attorneys and the seller’s advisors to set up the proper acquisition structure and working capital peg to acquire our first portfolio company. They also performed the financial due diligence needed to get us comfortable with the deal terms and support our financing needs.
Louis York Capital
Drew Caylor, Partner
I was hired to be the platform CFO for a large private equity firm executing an aggressive roll-up strategy after they had already completed three significant add-on acquisitions. I called my relationship partner in the Brown Smith Wallace Transaction Advisory practice the Wednesday night before Thanksgiving asking for help with post-closing accounting support and diligence efforts on new acquisitions. Right away they mobilized a team to help us meet our audit objectives. They also helped us execute and account for over $200M of acquisitions during the following two years I was at the Company.
Ron Moser, Former CFO
- Transaction Advisory and Tax Leaders Co-Present Webinar “Getting Deals Done in Today’s M&A Environment: Surviving Due Diligence to Ensure a Swift Close”02.08.2019
- Private Equity Industry and Transaction Advisory Leaders Discuss Key Steps to Simplify M&A Working Capital07.06.2018
- Online/Live Webinar, 03.13.2019