The CFOx Transaction Services team supported a Michigan-based private equity firm with Buy-Side Quality of Earnings (QoE) procedures for two commercial landscaping targets. Both businesses were evaluated as potential add-on acquisitions to the PE firm’s growing national landscaping platform.  

As part of the engagement, CFOx performed a comprehensive assessment of each target’s financial performance to help the client evaluate historical results, identify transaction risks, and validate normalized earnings. In addition to the Quality of Earnings analysis, the team completed detailed Net Working Capital (NWC) and Net Debt procedures to provide the buyer with a clear understanding of the assets and liabilities expected to transfer at closing. 

A key area of focus was evaluating the quality and sustainability of working capital balances, including accounts receivable, accounts payable, accrued expenses, and other operating current assets and liabilities. CFOx analyzed historical working capital trends, identified non-recurring or non-operating items, and developed a normalized working capital baseline to help inform Purchase Agreement negotiations. This analysis provided the foundation for establishing a Target Net Working Capital amount and helped the buyer understand potential purchase price implications related to working capital fluctuations. 

In addition to the core QoE procedures, CFOx completed several supplemental analyses, including a Proof of Cash, Payroll and Tax Reconciliations, and detailed reviews of accounts receivable and accounts payable balances. These procedures helped validate reported balances and identify items that may require adjustment when calculating Adjusted Net Working Capital at closing.  

Beyond supporting diligence efforts, CFOx’s work positioned the buyer for a smoother post-close process. By documenting key working capital assumptions and identifying potential adjustment areas before closing, the client was better prepared to evaluate any future NWC Settlement calculations and resolve post-close true-up discussions efficiently. The analysis provided a clear framework for comparing actual closing working capital to the negotiated target and understanding any resulting purchase price adjustments. 

Through this engagement, CFOx helped the private equity firm move forward with both acquisitions equipped with thorough, data-driven financial insights, strengthening the platform’s strategic expansion efforts within the commercial landscaping industry while reducing uncertainty around both the transaction and post-close net working capital true-up process. 

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.

TS Services Provided

• Quality of Earnings (QoE) Analysis
• Net Working Capital Analysis and True Up
• Net Debt Analysis
• Proof of Cash Analysis
• Payroll and Tax Reconciliations
• AR and AP Assessment