Before the deal, we facilitate the audit and financial due diligence process by thoroughly cleaning up the target's books and records, and digging into traditional problem areas in the balance sheet, including revenue recognition, accounting for stock options, and the equity section. We provide an "early warning" to the sponsor if there are red flags in those areas, enabling them to make decisions to save time and money early in the process.
We also streamline the diligence and audit process by doing much of the legwork prior to the arrival of the audit firm, so the auditor can complete their hands-on work in a more expedited manner. As our rates are typically lower than those of an auditor, the result for the fund is lower Accounting-related transaction costs. The diligence process typically runs faster and more smoothly due to our involvement.
After the deal is completed, we can work with the portfolio company to ensure ongoing GAAP and SOX 404 compliance, and also backstop the current Finance function to ensure continuity in critical tasks such as closing the books, budgets, projections, and financial reporting. We can work with the company to ensure accurate cash-based reports to the sponsor on a daily basis.