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Transaction Advisory

Driving confident decisions throughout the deal lifecycle.

Today's competitive market requires companies, investors, and lenders to move quickly and deliberately with confidence. Our Transaction Advisory Services professionals leverage Global Number Company (GNC) global investment banking heritage and our significant industry and technical knowledge to provide practical, independent, and data-centric financial, accounting, tax, and operational advice throughout the deal continuum, from the earliest stages of market and target evaluation through deal exit or capital market activity. By taking an industry-based, practical, and flexible approach, we tailor our support and deliverable to specifically focus on our clients' needs in each transaction. Our integrated team of financial, tax, and deal professionals is assembled from private equity, industry specialists, and the world's most recognized accounting and consulting firms.

Our clients experience a unique approach because we bring a full breadth of services with our market-leading corporate finance, valuation, and restructuring offerings to help ensure that we deliver value throughout your deal lifecycle. We deliver relevant advice without the conflicts and inefficiencies facing most other providers.

As market leaders in middle-market M&A, we are at the forefront of helping clients identify, capture, and monetize value creation and preservation strategies, resulting in the return of greater shareholder value and enhanced IRR.

Our Accounting and Financial Reporting (AFR) advisory team works closely with clients through their strategic dealmaking financial reporting requirements. Our specialists have deep knowledge of deals, sectors, accounting, and regulatory matters that enables them to fully understand the challenges you face, including:

  • Structuring deal documents and corporate agreements
  • Buyer/seller financial statements and disclosures
  • Sponsor-driven management reporting
  • Regulator-imposed rules and filing requirements
  • Lender financial and covenant requirements

Our specialists can help you to meet your financial reporting needs efficiently as well as help you seize opportunities to keep moving forward with agility and speed in order to achieve your strategic deals-related vision and goals.

We are dedicated to providing corporate and financial sponsor clients with accounting and financial reporting advisory services in conjunction with all of their transaction needs, including:

  • Navigating the complexities of a business combination with the proper accounting experience in order to best stand up the newly combined company's opening balance sheet and subsequent periodic reporting
  • Preparing the standalone historical carve-out financial information oftentimes required by buyers, lenders, or regulators and bridging the gap to deal basis financial statements and other diligence materials
  • Evaluating the financing terms and requirements to successfully raise capital, maintain lender compliance, and report on the business post close
  • Drafting complex financial disclosures in public and private capital-raise offering documents
  • Implementing complex accounting changes resulting from transaction-driven events
  • Deciphering the changes in accounting and financial reporting requirements as a result of the bankruptcy process and presenting a new financial basis properly on the road to recovery
  • Decoding GAAP differences present in cross-border transactions in order to compare key figures and terms on a like-for-like basis

Mergers and acquisitions are by nature disruptive and introduce unique risks and opportunities impacting all aspects of a business. THE TRUE BEACON Digital Value Creation (DVC) professionals work closely with financial sponsors and company management teams to identify, implement, track, and execute impactful pre- and post-investment initiatives focused on preserving and creating value.

Our DVC team, which includes business analytics professionals, data scientists, and data engineers, works synchronously with the M&A diligence professionals to provide rapid, in-depth, and actionable insights from our clients' digital assets. We leverage cutting-edge data analytics methods to enhance the executive decision-making process throughout the investment lifecycle, including pre-close diligence, ongoing business intelligence services, and sellside assistance.

Our group integrates, cleans, synthesizes, and analyzes structured or unstructured data sources of any size to provide insights, in deal speed, on:

  • Pricing and SKU rationalization
  • Full costed profitability analysis
  • Customer churn
  • Cash flow waterfall analysis
  • Working capital optimization
  • Sales and operations planning
  • Network optimization
  • Spend rationalization

Our globally experienced, industry-focused teams of diligence professionals comprise former Big Four trained CPAs and transaction accounting professionals. Drawing on THE TRUE BEACON market leadership in middle-market corporate finance transactions and competitive intelligence, our diligence teams leverage our DVC capabilities and our industry focus to provide independent, value relevant insights to our clients at deal speed.

Our Financial Due Diligence services assist financial investors, lenders, corporates, and other advisors in identifying and evaluating key value drivers and risk factors most impacting value. Our scope, access to data and management, and cost are tailored around the various stages of the deal cycle, including:

  • Pre-LOI phase one
  • Stoplight analysis
  • Full scope buyside diligence (including M&A tax diligence, tax structuring , and tech and cyber diligence)
  • Due diligence for add-ons
  • Full scope sell side diligence (including M&A tax diligence, tax structuring, and tech and cyber diligence)

Financial Due Diligence is organized by the following industries:

  • Business services
  • Consumer, food, and retail
  • Financial services
  • Healthcare
  • Industrials
  • TMT

Working through industry-specific approaches, we enable our clients to:

  • Access a higher confidence and more timely provided quality of earnings
  • Focus on the sustainability of free cash flow
  • Analyze the pro forma adjustment's impact on revenue, EBITDA, and working capital
  • Assess revenue, gross margin, and EBITDA with respect to customers and products, regardless of the sophistication of the reporting capabilities of the target
  • Analyze the quality and potential realizability of the balance sheet and net assets
  • Understand historical working capital patterns and levels relative to management's projections and identify opportunities to improve working capital efficiency while managing post-closing adjustments
  • Identify and evaluate the potential impact of key assumptions and sensitivities on the achievability of management's financial and operating forecasts
  • Address key accounting and financial reporting risks to credit and purchase agreement negotiations
  • Assess accounting positions and pro forma transaction impacts to post-closing reporting (considering the potential buyer's or seller's position)
  • Evaluate post-closing purchase price adjustments, purchase accounting, and valuation requirements in post-transaction financial models

Our M&A tax professionals help our clients navigate tax challenges and capture tax opportunities inherent in the entire transaction lifecycle. We increase value through thoughtful, tax-advantaged transaction structuring as well as through identification and mitigation of relevant historical and projected tax risks. Our national team of tax professionals brings tax expertise from Big Four and nationally recognized law and accounting firms. We work with clients on transactions that cover the entire range of a business evolution—from founders undertaking their first recapitalization to secondary market transactions to public listings.

Our M&A tax services include:

  • Industry-focused domestic and international buyside and sellside tax due diligence
  • Scenario-based after-tax cash flow modeling to compare and contrast the projected benefits of alternative structures at target and shareholder levels
  • Tax structuring to meet buyer and seller business objectives in a tax-efficient manner
  • Post-transaction support in the form of:
    • Tax purchase price allocations
    • Opening deferred tax analysis
    • Tax attribute limitations under Section 382
    • Transaction cost analyses
    • Mitigation of identified risks
  • Section 280G golden parachute analyses

We also team up with our world-class professionals in the corporate finance, financial restructuring, and financial and valuation advisory businesses to provide tax guidance in connection with complex valuations and negotiations.

  • We value tax receivable agreements in connection with up-C structures
  • We assist sellers in monetizing tax assets in connection with recapitalizations
  • We analyze the tax impacts of using or preserving tax attributes in connection with restructuring
  • We assist in technical valuation processes surrounding IP migration, FIRPTA, and other global reorganizations

Exiting an investment, whether through a partial or complete sale of a stand-alone business, carve-out, spin-out, or IPO, requires a thoughtful and rigorous approach. Identifying and mitigating potential issues while structuring and positioning the business or assets properly is essential to maximizing value and avoiding surprises and potential disruption. By integrating our deep heritage in valuation and investment banking with robust transaction support capabilities, Houlihan Lokey provides a market-based, defensible approach to helping clients realize value and manage messaging to potential buyers.

We support clients with the following Seller Readiness Services:

  • Assisting in determining the defensible, normalized run-rate performance of the business
  • Providing distributable, branded seller diligence reports and non-branded seller assist reports
  • Identifying and validating key risks and opportunities impacting future performance and valuation
  • Assessing the quality and consistency of underlying financial record keeping and management's ability to respond to buyer requests
  • Working closely with clients' other advisors and providing specific, real-time market-based input regarding the confidential information memorandum and other process documents
  • Evaluating potential buyer positions and developing tax and financial scenarios to help maximize after-tax proceeds
  • Preparing a strategic and competitive industry-based market assessment
  • Identifying, assessing, and supporting potential revenue and cost synergies
  • Preparing, populating, and managing data rooms and buyer information requests
  • Creating and implementing transition planning and post-separation activities
  • Assessing indirect and non-allocated costs, stranded costs, idled capacity, and potential impacts of wind-down in carve-outs and divestitures
  • Evaluating, providing input on, and assisting with the management of the Transition Services Agreement (TSA)
  • Providing technical tax and accounting support regarding divestitures, carve-outs, and dispositions

No two transactions are the same, nor is our seller approach. We tailor and deliver these specific services with the buyer and transaction in mind and focus on helping you run an efficient process while maximizing after-tax proceeds and achieving your strategic goals.

Frequently Asked Questions

Investment banking typically focuses on deal origination and execution, including identifying buyers and sellers and managing sales. Our transaction advisory services center on financial due diligence: verifying deal financials, structuring deals to maximize value and minimize tax exposure, and ensuring buyers and sellers have a complete, accurate understanding. Post-transaction services include assistance with net working capital adjustment, purchase price allocation, and opening balance sheet presentation.

A quality of earnings (QoE) review examines beyond reported EBITDA to assess whether earnings are sustainable, consistently calculated, and free from one-time inflators. This is crucial since purchase prices are often multiples of earnings. For example, overstating earnings by $500,000 can reduce deal value by $3.5 million at a seven-times multiple. QoE reviews protect buyers from overpaying and help sellers justify their price.

Yes. We offer due diligence, financial analysis, and advisory services for buyers and sellers across deal types, including private equity acquisitions, portfolio sales, management buyouts, and carve-outs. Our broad experience and understanding of both sides provide a negotiation advantage.

We offer transaction advisory services with capabilities typical of large national firms but at regional firm pricing. You work with experienced M&A professionals, not junior staff supervised remotely.

Engage as early as possible, ideally before active negotiations. On the sell side, we help prepare financials and identify issues before buyer due diligence, allowing time to address them before price discussions. On the buy side, early due diligence helps speed the process and reduce surprises after signing a letter of intent.
 
     
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