Guardian Due Diligence Blog
Thought leadership and news from the Guardian Due Diligence team.
Who We Work With (& Who We Don't!)
At Guardian Due Diligence, we’re advocates for buyers. That means that we value your time. Time is of the essence in every deal, and you don’t want to be slowed down in your deal working with a diligence partner that’s not suited to your deal or your needs. Before we start working together, let’s make sure that we’re a good match.
War Story: Sandbagging Salaries
One of our clients was considering a business with a management team that had been around and working with each other for a long time. The management team was planning to stay with the business after the sale. We start the Quality of Earnings process, and we notice that the salaries of this veteran management team aren’t representative of their experience level. The buyer wasn’t initially worried about this detail. As long as the team was planning to stay with the business and wanted to continue working for their current salaries, he figured that they weren’t relevant to the deal.
Be Wary of Loyal Management Teams
I was helping a client buy a technology business that had a huge marketing engine driving new sales. It was not a software-as-a-service company per se, but more of a tech-enabled services company that required some human interaction and customer service.
War Story: Don’t Be Too Eager With Your Lender
We started with a new client who was a bit antsy and anxious—which is typical for someone doing their first deal. We talked to him about how the Quality of Earnings (QoE) is a tool that provides the bank with a properly formatted set of financials. It helps the bank understand the business thoroughly. The purpose of the QoE is to provide a true picture of the company’s profit and cash flow. This analysis is more substantial and better supported than tax returns.
Acquisition War Story: What Accounting Reveals
Businesses either use cash or accrual accounting. You should be cognizant of which accounting style is being used during your due diligence process for your acquisition deal.