Performing an Urgent Sell-side Quality of Earnings Analysis

Discover how Kroll’s Transaction Advisory Services Team helped a manufacturing client sell their business at a premium through developing a modernization strategy to enhance their operations.

The Challenge

Kroll Transaction Advisory Services

The Kroll Transaction Advisory Services team was asked to provide a valuation for a manufacturing client. A value for their business had been suggested by their investment bankers, and the client wanted to confirm that the bank’s price was accurate. Kroll was asked to perform a sell-side Quality of Earnings Report and to ensure that EBITDA supported the projected value. This was a time-sensitive request, requiring a sense of urgency and deep industry experience to accommodate the quick turnaround.

Kroll's Solution

Kroll Transaction Advisory Services

To gain a better understanding of the seller's business, Kroll's experts performed a deepdive operations review. The team discovered plenty of EBITDA enhancing opportunities to improve efficiencies and effectiveness. A review of the manufacturer's floor operations revealed archaic practices and Kroll’s due diligence uncovered ordering issues and a debilitating absenteeism issue.

Kroll developed a modernization strategy that included major improvements in manufacturing and ordering. Operating models were restructured, and a new automation design was completed.

As a result, the number of order consolidation errors was reduced, which increased production capacity, reduced inefficiencies and streamlined operations.

The Impact

Kroll Transaction Advisory Services

After uncovering and addressing performance weaknesses, buyers recognized the real value of our client's business and paid accordingly. In the end, the client was able to sell the business for 30% more than the investment bank had projected.

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Transaction Advisory Services

Kroll’s Transaction Advisory Services platform offers corporate and financial investors with deep accounting and technical expertise, commercial knowledge, industry insight and seamless analytical services throughout the deal continuum.