Due Diligence On Demand

We help our clients make sound investment decisions by scrutinizing a target company’s reported results to ascertain its true performance. Our clients rely on us so they can focus on other critical transaction issues, such as strategy and growth plans, arranging financing, and negotiating transaction terms.

Asenti provides:

Our most common deliverable is a full-scope Quality of Earnings report, but we frequently undertake engagements with a reduced scope, limited reporting, or both (as described below).

  • Full-scope Quality of Earnings analysis with a comprehensive written deliverable. This type of analysis covers items impacting EBITDA, income statement, balance sheet, cash flows, and projections.
  • Full-scope analysis with an abbreviated written deliverable. This involves a full-scope analysis of the target’s results with written reporting limited to items impacting reported EBITDA.
  • Reduced scope analysis with abbreviated reporting. Perfect for those interested in analyzing and reporting on a specific topic. For example, target management may have proposed a significant number of pro forma adjustments to EBITDA around topics such as headcount reductions, facility closures or other restructuring plans, or acquisition synergies or savings from an automated production line implementation. In this situation, we might evaluate and report solely on management’s pro forma adjustments.

We often share and discuss our reports with interested third parties upon our client’s request.

Key Steps During Quality of Earnings Analysis


Normalize Reported Results

Evaluate the quality of reported results and normalize for non-recurring and non-cash items.


Evaluate Adjustments

Evaluate historical and pro forma EBITDA adjustments proposed by the target.


Assess Profitability Trends

Perform analyses on: i) gross margin by service line, product, division, and customer (inc. changes in price vs. volume), ii) operating expenses (inc. human capital), iii) customer and vendor relationships, iv) seasonality, and v) other key performance indicators.


Assess Accounting Function

Assess the accounting systems, personnel, processes, and controls and the reliability of target-provided information. Comment on the ability of management to prepare meaningful financial and operational reporting on a timely basis.


Analyze Net Working Capital

Analyze monthly trends in NWC to assist in developing targets for purchase price adjustments and determining the size of required credit facilities.


Analyze Balance Sheet

Evaluate the realizability of assets and completeness of liabilities. Analyze composition/age of assets and assess reserve methodologies. Analyze capex by major category/ nature. Analyze the nature of accrued expenses (inc. impact of estimates). Identify unrecorded liabilities.


Evaluate Corporate Cost Allocations

If applicable, understand the allocation corporate costs included in division results and what costs will be required for the division to operate on a standalone basis after separation from the parent.


Evaluate Projections

Understand critical success factors and assess significant assumptions driving the achievability of near-term results. Understand broad assumptions driving the achievability of long-term results.

Conclude Confidently

Allow Asenti to provide unrivaled financial expertise and professional support to enable your investment decisions.