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Overview

The Brown Smith Wallace Transaction Advisory and Litigation Support (TALS) practice can help companies meet major business goals throughout their business lifecycle. Our team has performed buy-side and sell-side transactions for public companies, private equity firms and a host of private companies, ranging in deal enterprise value from $1 million - $500 million. We understand that the day-to-day operations for many companies often occur in the shadow of significant events, including:

  • The growth offered by mergers and acquisitions
  • The opportunity to focus on core operations via divestitures
  • The enhanced financing and liquidity opportunities of recapitalizations
  • The opportunity to survive and ultimately prosper via turnaround scenarios

TALS clients rely on our skills and experience to provide expert analysis and opinions during these important milestones.

Our TALS team provides ownership, senior management and boards of directors with the transaction services outlined below. We provide buy-side and sell-side advisory services in order to assist companies planning mergers, acquisitions, or divestitures. Services provided may include the following: searching for prospective buyers or targets; preparing information memoranda or solicitation letters; analyzing the value of subject operations or targets; assessing offers received or preparing offers; and assisting in negotiations.

Acquisition Services

Due Diligence and Quality of Earnings – We perform a comprehensive due diligence review of the target company’s industry, financial statements and business practices. A quality of earnings report is often used to obtain outside financing or Board approval for the transaction. Quality of earnings reports also provide support for renegotiating the purchase price in the final purchase agreement or for abandoning the transaction because of risks unknown at the Letter of Intent stage.

On the buy side, the purchaser is presented with the seller’s adjusted EBITDA schedule. Our professionals then:

  • Verify the seller’s financial statements
  • Analyze the EBITDA adjustments and perform a detailed analysis to determine our own adjustments
  • Assist in determination of working capital peg
  • Develop pro-forma adjustments

Opening Balance Sheet – In an acquisition, the buyer may purchase the new business’s total liabilities as well as its assets. By creating an opening balance sheet, our professionals record the purchased assets and liabilities at fair market value. We accomplish this through:

  • Inventory price testing
  • Subsequent collections on accounts receivable
  • Valuation of fixed assets
  • Valuation of intangible assets
  • Searching for unrecorded liabilities

Operational Consulting Services – By working with our Advisory Services and Insurance Consulting practices, our team performs a comprehensive review of the new business’s systems, quality controls, environmental risks and operational deficiencies. We also examine the current insurance coverage to identify gaps in coverage or insufficient coverage, as well as opportunities for cost savings.

Accounting, Audit and Tax Strategies – Our accounting, audit and tax experts can help set up a favorable tax structure or strategy prior to the transaction for material tax savings going forward. Our areas of expertise include accounting integration, purchase price allocation, international tax, property tax, and state and local tax.

Exit Services

Exit Planning – Exit planning is a process designed to help a business owner successfully withdraw from his or her business and plan for the next stage in life. This process is generally a team effort, consisting of advisors to both the business and to the owner personally, all coordinated to achieve the owner’s goals.

Calculation of Value – We perform a high-level analysis to estimate the range of proceeds a client can expect after a sale in order to guide the decision of whether to pursue an exit. Instead of performing a business valuation, a simple indication of value might give a business owner all the answers needed before making a decision. However, we can also perform a complete business valuation to understand not only the business’ fair market value, but also its value drivers. (Note: A calculation of value performed in the Transaction Advisory context is a consulting arrangement, and is not an Appraisal, as defined by the Uniform Standards of Professional Appraisal Practice.)

Evaluation of Financial Statements – We can help prepare quality financial statements that date back at least two years, as well as prepare a sound forecast that projects results at least three years forward. Including our Tax Services professionals in this process ensures that the seller is considering all angles, including tax ramifications.

Due Diligence and Quality of Earnings – On the sell side of a transaction, performing a proactive analysis might uncover issues prior to a buyer conducting their own due diligence. A quality of earnings review can help minimize surprises. On the sell side, we:

  • Perform a financial analysis to determine GAAP adjustments, normalization adjustments, discretionary items and non-recurring items
  • Prepare a diligence report, which is an in-depth analysis of the business’ performance and position and provided to potential purchasers
  • Assist with selection of an investment banker and attorney

Market Business for Sale – We can help you select the best investment banker and transaction attorney for your exit strategy. Together, we will develop a strategy to market your business to achieve your exit goals.

Additional Transaction Services

Working Capital Disputes – Working capital can often lead to disagreements or disputes during an acquisition. Buyers typically expect that a seller delivers a minimum amount of working capital at the closing of deal. Therefore, most purchase agreements include a provision for a post-closing true-up of net working capital. The true-up reflects changes in current assets and liabilities between the contract signing and closing dates. Our services include reviewing the acquisition agreement, calculating delivered working capital, performing a working capital true-up, assisting in settlement discussions or negotiations, and assisting with additional escrow settlement items.

CFO Advisory – We provide leading best practices and strategies to help CFOs and finance executives make the most of their accounting and finance resources. Our CFO advisory services include cash management, financial reporting, budgeting and forecasting, and audit coordination.

Turnaround Services – Turnaround services are directed toward helping troubled companies enter and exit a recovery process. Services provided include:

  • Consulting – We evaluate key issues and formulate an action plan to improve financial results
  • Management – We oversee the execution of the action plan day-to-day to ensure rapid results
  • Interim Management – We serve as your C-level executive (CEO, COO, CFO, CIO) as you conduct a search for the right permanent person
  • Advisory Services – We advise the board of directors and senior management on a periodic basis to facilitate a turnaround

Please contact the Brown Smith Wallace TALS team to learn how our transaction services can benefit your business.

Experience

Testimonials

  • 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.

    FFL Partners
    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.

    Private-Equity-Owned Company

    Ron Moser, Former CFO

  • The Transaction Advisory team at Brown Smith Wallace helped us prepare for the sale process and identify tax structuring strategies to maximize the sale proceeds. Our decision to go with an out-of-state firm was driven by the responsiveness, flexibility and seasoned team of professionals at Brown Smith Wallace who have real-world transaction experience on both the transaction and tax side. From their responsiveness on weekends, early mornings and late nights, to their willingness to meet at our facility to help us learn more about their practice, the team at Brown Smith Wallace exceeded our expectations.

    Alpha Energy Solutions

    Joe Rhodes, Owner

  • We have been an audit and tax client of Brown Smith Wallace for many years.  When we were approached by a large private equity firm and their Big 4 diligence team about buying our company, we reached out to the Transaction Advisory team at Brown Smith Wallace.   The transaction team served as our intermediary helping us go through the entire sale process from beginning to end, including the complex working capital negotiations and tax structuring strategies to maximize the sale proceeds. Our decision to go with our accounting firm’s transaction team was driven by the seasoned team of professionals at Brown Smith Wallace who have Big 4 and real-world transaction experience from both sides of the desk. 

    Applied Logic

    Bill Terry, Former Shareholder and CEO

  • 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.

    Control Devices
    Jamie Reuter, CEO

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