United States

M&A Deal Negotiation

CASE STUDY

RSM recently helped a client negotiate a $4 million dollar reduction in the purchase price of a platform acquisition after discovering misplaced reporting codes in the company's financial statements.

The client: A private equity firm seeking to buy a consumer electronics distributor operating across 13 countries, mostly in Europe.

The issue: The target (an orphan asset of the parent company) had no CEO or CFO and had gone through a number of restructurings in the past few years, resulting in misaligned financial reporting systems. To complicate things further, the unit had never been separately audited.

Although the unit's accounting function was somewhat centralized in London, there was little oversight and RSM discovered inconsistencies between countries.

The solution: RSM's centralized approach led to quick coordination of transaction advisory professionals in the U.K. to expedite the global due diligence process. Because we knew where to look and what to look for, we identified significant inaccuracies in the financial reporting, including misplaced reporting codes.

We prepared the private equity firm for potential carve-out issues, such as central costs and loss of purchasing synergies. More importantly, we helped our client optimize deal terms as a result of the financial inaccuracies.

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