Finding an attractive acquisition target is only the first step. The bigger question is whether the business can stand up to scrutiny once diligence begins.
CFOx recently worked with a private equity-backed veterinary services platform to evaluate two animal hospital targets. While the client was still working toward closing its first acquisition, a second opportunity emerged. In a competitive market, deal timing rarely aligns perfectly, making it important to have a trusted diligence partner ready when opportunities arise.
For both targets, CFOx provided a Quality of Earnings (QoE) analysis designed to help the buyer evaluate the accuracy, sustainability, and quality of reported earnings. In addition to the QoE, the engagement included a Proof of Cash, Customer and Vendor Concentration Analyses, AR and AP Agings, and Tax and Payroll Reconciliations.
While EBITDA is often the headline metric, it rarely tells the full story. Effective diligence examines the underlying drivers of performance and highlights risks that could impact value after close. Concentration analyses can uncover customer or vendor dependencies. Aging reports can reveal collection challenges or working capital concerns. Tax and payroll reconciliations can identify potential compliance issues, while Proof of Cash procedures help validate that reported results align with actual cash activity.
Together, these analyses give investors a clearer understanding of what they are buying and whether the business can deliver the performance reflected in the financials.
At CFOx, we help investors move beyond surface-level financials to understand the true quality of a target’s earnings. By combining QoE services with targeted supplemental analyses, we help buyers identify risks early, evaluate opportunities with confidence, and make better investment decisions before capital is committed.
If you would like to learn more about our Transaction Services, please reach out via email (info@cfoxadvisory.com) or schedule a call directly on our Contact Us page.
Services Provided:
- Proof of Cash Analysis
- Quality of Earnings (QoE) Analysis
- Due Diligence on Targets
