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CB&H Effort Realizes Selling Price Millions Higher Than Expected

Scenario

The client operated in a very desirable Department of Defense satellite telecommunications services market, and was looking to sell. The maximum selling price clearly would be to a public company, requiring that the accounting records were up to SEC standards. The client did not have professional management in the financial and administrative area, used tax basis data to manage the company, and had never been audited. As such, the client was not prepared to meet a public company’s due diligence review, and did not understand the SEC accounting and reporting standards that needed to be met. The owner wished to sell as soon as possible to take advantage of the exceptionally strong M&A market, and engaged the services of CB&H. But time was limited as a potential buyer would want to complete due diligence as soon as possible after a Letter of Intent was signed.

CB&H Action Steps

Prior to the owner asking for our help, the government contracting specialists from CB&H had recommended that the company upgrade our attest work from a review to an audit because we knew that the company was an attractive acquisition. Once that process had begun, we put a team of three consultants on-site for about four months, and worked to establish the key records that we knew an acquiring public company would ask to see. We also worked closely with the investment bankers to prepare the company for due diligence.

Results

We finished our work in time for the due diligence review by a public company. The review lasted less than two weeks, which was very short for a $100 million revenue company. The acquiring company was very satisfied with the quality of the records. The deal closed approximately six months after CB&H started the consulting project, with a selling price millions of dollars higher than the owner expected.