Everything Sellers Need to Know About Financial Due Diligence

About the Episode

In this episode of M&A Talk, we discuss the intricacies of financial due diligence with award-winning CPA Helana Robbins Huddleston, a partner with CohnReznick Advisory with over 20 years of experience. We talk about ways sellers can prepare for a sale, the key areas investors look into when considering a business for investment or acquisition, how you can hasten the sales process, and much more. If you are thinking of selling or buying a business, join us to learn more about this critical area of preparation. 

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In this Episode

Highlights

• Financial due diligence can often be conducted in one week once the information is gathered together.
• Not preparing for due diligence increases the time it takes to close the transaction and dramatically increases your legal fees – problems uncovered in due diligence will need to be addressed in the purchase agreement.
• 95% of investment bankers require that the seller conduct pre-sale (sell-side) due diligence before they go to market.
• Your CPA MUST have experience conducting M&A due diligence to help you prepare for the sale.
• Buyers prefer to see financial statements on an accrual basis (aka GAAP compliant).
• Many CPAs don’t want to conduct sell-side due diligence because they aren’t familiar with the process.
• Conducting pre-sale financial due diligence often pays for itself.
• Pre-sale financial due diligence is different from an audit.
• An audit carries much more weight if it’s conducted by a reputable firm.
• Ask for a redacted or sample quality of earnings report (Q of E report) before you pay for one.
• A Q of E report can be used when marketing a company.
• The key features of a data room are user-friendliness and updates when a new document has been added.
• Most transactions are cash free, debt free, and include net working capital.
• Even an audit will not uncover every problem – audits have a materiality threshold.
• Financial due diligence is separate from tax due diligence.

Learn More About This Episode

• M&A Due Diligence | Checklist & Overview
• M&A Due Diligence Preparation
• EBITDA | Definition, Formula & Example – A Complete Guide
• M&A Reps & Warranties
• M&A Purchase Agreement | A Complete Guide
• T.J. Noonan on Insuring M&A Risks

Meet Our Guest

Helana Robbins Huddleston

Partner at CohnReznick Advisory | Chicago, Illinois

Helana Robbins Huddleston is a partner with CohnReznick Advisory with over 20 years of expertise in financial due diligence, restructuring, auditing, and business process improvement. Helana leads buy-side and sell-side financial due diligence engagements with strategic and financial buyers for private and public companies with enterprise values ranging from $10 million to $500 million. Helana was recently honored by the business newspaper Crain’s Chicago Business as Notable Gen X Leader for the service she provides to her clients and community. Helana has also received the Emerging Leaders Award from M&A Advisor in 2018 and the Turnaround of the Year Award from the Turnaround Management Association in 2011.

LinkedIn: https://www.linkedin.com/in/helana-robbins-huddleston-cpa-cira-mba-06794bb