Friends,
As we begin a new year, we would like to take a moment to thank you for all your support in 2019. Last year, we worked with many old friends, made new ones, welcomed new talent to our team and grew alongside our clients. Our Consulting Practice experienced organic double-digit growth in revenue, and we are grateful for having you be part of our journey.
Here are some highlights of what made 2019 special, and we invite you to reach out and say hello. This year is gearing up to be another exciting one, and we look forward to sharing it with you.
Moore Colson is up for 8 Best of the Daily Report awards. Voting is now open and will close on February 21st. We would appreciate your vote!
Select Engagement Highlights
Moore Colson Consulting is comprised of two distinct practice areas:
- Transaction Services offering buy-side and sell-side due diligence and quality of earnings analysis.
- Special Services offering turnaround and restructuring, interim management, forensic accounting, litigation support, debt advisory, mediation and arbitration, lender services, and court and estate fiduciary, among others.
Below are highlights of a small sample of our most interesting engagements of 2019.
Transaction Services: Buy-side
We performed buy-side due diligence on a $40 million revenue company in the commercial construction industry for one of our private equity clients.
What made this engagement particularly interesting?
Management was attempting to “get credit” for a recent run-up in business due to delayed insurance claims from a recent natural disaster. According to management, EBITDA was $7.1 million while our calculation of pro forma EBITDA was $2.7 million.
How we added more value:
We identified and isolated specific revenue/margin resulting from that recent natural disaster and adjusted EBITDA by these amounts on a pro forma basis, giving our client a stronger position for negotiation, leading to a deep discount on their initial investment. The deal ultimately closed at a better multiple of LTM EBITDA for our client.
Transaction Services: Sell-side
We performed a sell-side due diligence engagement with a full scope report for our private equity client’s portfolio company in the specialty distribution industry with revenues of $51 million.
What made this engagement particularly interesting?
As a private-equity owned company, they had identified a number of EBITDA adjustments on their own. We further assisted our client in identifying a number of additional EBITDA adjustments, which increased EBITDA from roughly $4.8 to $5.2 million and subsequently increased the sales price earned by our client.
How we added more value:
We assisted the management team through sell-side diligence by preparing them for various inquiries from potential buyers along with managing the data room that was shared with potential buyers. Our client was very pleased with our work product noting that it held up extremely well through buy-side due diligence performed by one of the Big 4.
Transaction Services: Financial Modeling / Buy-side
We performed a buy-side due diligence and built a financial model for our client looking to invest in a $46 million revenue company in the service industry.
What made this engagement particularly interesting?
The company was highly distressed and on the verge of bankruptcy. We built a dynamic model projecting out the next 12 months of cash flow. Our client was able to determine how much cash injection was needed to keep the company operating while minimizing their capital investment.
How we added more value:
We not only discovered and projected a number of financial issues but also identified other areas of concern about existing contracts, operations and synergies for our client to consider.
Transaction Services: Buy-side
We performed buy-side due diligence for a $12 million revenue company in the manufacturing industry. This was a bolt-on acquisition for a strategic client.
What made this engagement particularly interesting?
The management team at the company could not explain the increase in margin from 2018 to 2019. Eventually, we discovered the margin was inflated due to “out-of-period” rebates and passing on material cost increases to customers to a greater extent than actually experienced (unbeknownst to the management team).
How we added more value:
Our asking the right questions of the target company and performing the appropriate analysis revealed the underlying cause of the margin increase. The normalized margin adjustment reduced 2019 LTM EBITDA significantly, providing a benefit to our client who lowered their purchase price accordingly.
Transaction Services: Sell-side
We performed sell-side due diligence for a client who was considering selling their cleaning/landscaping business.
What made this engagement particularly interesting?
We discussed the sell-side due diligence process with the client and their investment bankers and how it would give potential buyers comfort with the company’s unaudited financial statements. We performed the diligence engagement and produced a sell-side databook that was shared with potential buyers.
How we added more value:
We took a completely cash-basis business – with mismatched revenues and expenses – and re-created monthly accrual income statements that the investment bankers took to market, resulting in a quick LOI. Because of our familiarity with this client, we were able to provide these services remotely, saving time and expense for the client.
Special Services: Litigation Support | Expert Witness
We performed forensic accounting, litigation support and expert witness services for a municipality related to a road expansion project and an associated condemnation of property at a multi-family housing complex.
What made this engagement particularly interesting?
The engagement entailed analyzing the financial results of a business allegedly impacted by the modification of its entrance associated with a road construction project. One of our Special Services team members testified twice during the two-week jury trial.
How we added more value:
We analyzed and compared the financial results of the business prior to the road construction and the associated condemnation and subsequent to the completion of the construction. During the two-week trial, a member of the Special Services team presented the results of this analysis, which showed that the business’s financial results after the project was completed were similar to its historical results prior to construction. This analysis reduced our client’s potential liability from multi-millions to a few hundred thousand dollars.
Special Services: Financial Advisory
We performed financial advisory services for an alternative energy company prior to and subsequent to the company’s bankruptcy filing.
What made this engagement particularly interesting?
The engagement entailed analyzing the financial results of a business that was struggling to meet its financial obligations and assisting with the company’s bankruptcy filing and ongoing financial issues.
How we added more value:
The company’s available financial resources were not sufficient to allow for the appointment of a Chief Restructuring Officer. As a result, we utilized the resources of the company’s accounting department to assist in tracking and analyzing the company’s financial results as well as preparing the bankruptcy schedules and monthly reporting. The limited resources frequently encountered in bankruptcy engagements often require outside-the-box solutions to complete the project in the most effective way possible.
Special Services: Financial Advisory
We performed financial advisory services for a road construction materials manufacturer related to the company’s business interruption claim.
What made this engagement particularly interesting?
The engagement entailed analyzing the insurance carrier’s calculation of the company’s loss of income related to storm damage at its manufacturing facility. The company had always been pleased with its working relationship with the carrier but wanted an experienced forensic accountant to review the carrier’s calculation for peace of mind.
How we added more value:
Based on our analysis of the carrier’s calculation of the company’s business income loss, several errors were identified in the claim schedules that incorrectly decreased the amount of the company’s claim. As a result, we prepared a memorandum outlining the identified errors and the carrier adjusted the claim and paid the company for its loss.
Moore Colson News:
2019 Firm Highlights
2019 was a busy year for Moore Colson. If you haven’t heard yet, we announced the opening of a new trust company in Chattanooga, Tennessee: Magnolia Trust Company. Magnolia provides individualized and independent trust administration services for high-net-worth individuals and families, including regional privately held business owners, foundations, family offices and charitable organizations in the Southeast. It does not serve in the area of investment management. Magnolia Trust company is owned by the shareholders of Moore Colson. We will open an Atlanta office for Magnolia in 2020.
In other Moore Colson news, we were thrilled to be named a Best of the Best firm once again by Inside Public Accounting (IPA) and to be ranked as a Top 20 largest and Top 10 fastest-growing accounting firm in Atlanta by the Atlanta Business Chronicle. In 2019, IPA ranked Moore Colson as a Top 150 U.S. firm while the Atlanta Journal-Constitution has ranked us as a Top Workplace since 2011. To learn more about all Moore Colson has to offer, please reach out to us or visit our website to see what’s new.
We look forward to working with you in 2020. Happy New Year!