Purchase of a maintenance company

One of our clients requested Simmons Gainsford Financial Investigations to assist them in purchasing a maintenance company.

Challenges

The Simmons Gainsford Financial Investigations team were required to provide an initial valuation of the Maintenance Company as well as subsequent advisory work (including Due Diligence) to help keep the negotiations on track.

The financial Due Diligence identified another company owned by the vendors in the same line of business. Reviewing the accounts provided by the company identified accounting policies which distorted the reported figures (such as including production labour costs below Gross Profit and using dividends to remunerate the directors/shareholders). The quality of the ongoing contracts, including the spread of the client base, the profit margins being obtained and the retention rates, were also examined.

Outcome

In the commercial negotiations these issues were addressed and resolved and the additional company identified was included in the acquisition at no extra cost.