Before the Deal: An Introduction to Due Diligence
Mar 24, 2025
Understanding Buy-Side and Sell-Side Due Diligence
Buying or selling a business is a highly intricate process that requires strategic foresight and rigorous analysis. Whether operating on the buy-side or sell-side, conducting comprehensive due diligence is the cornerstone of deal success, mitigating exposure to financial, operational, and legal risks.
What is due diligence?
Due diligence is an investigative process designed to validate and assess all material aspects of a potential transaction. It involves a deep dive into financial, legal, operational, technological, and commercial factors to ensure a well-informed decision-making process. Due diligence highlights considerations by providing an investigative lens that ultimately protects the buyer and the seller from potential pitfalls, safeguarding against unforeseen liabilities and value erosion.
Basics of Buy-Side Due Diligence
On the buy-side of a transaction, ensuring that a potential target is a solid investment and aligns with your business’s overarching goals is paramount. Therefore, the primary focus of buy-side due diligence is to verify the accuracy and integrity of the seller’s financial disclosures while identifying potential red flags. Key areas of review include:
- Quality of Earnings (QoE): Assessing revenue sustainability, EBITDA adjustments, and non-recurring expenses to gauge true earnings power.
- Cash Flow Analysis: Examining historical and projected free cash flow to ensure liquidity adequacy and debt serviceability.
- Balance Sheet Strength: Evaluating working capital efficiency, asset quality, contingent liabilities, and off-balance sheet exposures.
- Legal & Compliance Risks: Identifying potential litigation, contractual obligations, and regulatory concerns that could impact post-transaction integration.
While audited financial statements provide a fundamental baseline, they often fail to capture operational synergies, market positioning, and cultural fit – making an integrated due diligence approach essential.
Basics of Sell-Side Due Diligence
For sellers, a proactive due diligence strategy enhances deal certainty and strengthens negotiating leverage. The goal is to preemptively identify and address areas of concern that could derail valuation or delay closing. Sell-side due diligence entails:
- Financial Statement Readiness: Ensuring GAAP/IFRS compliance, reconciling discrepancies, and preparing robust financial models to withstand buyer scrutiny.
- Legal and Regulatory Preparedness: Resolving outstanding liabilities, clarifying ownership structures, and securing necessary approvals to expedite deal execution.
- Commercial Positioning: Validating customer contracts, market share stability, and competitive differentiation to justify premium valuations.
By conducting due diligence preemptively, sellers can bolster buyer confidence, minimize post-LOI renegotiations, and drive a more efficient closing timeline.
Making Informed Decisions
Regardless of deal positioning, due diligence is a critical component of transactional success. Whether assessing an acquisition target or preparing for a liquidity event, the process is inherently resource-intensive and demands meticulous planning. Engaging a third-party advisory firm can provide an independent, data-driven perspective, enhance deal certainty, and optimize transaction outcomes.
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Patrick Mannion, Managing Director
Transaction Advisory Service
spatrick.mannion@wvco.com
Categories: M&A
Social Security Retroactive Payments: What You Need To Know
Mar 07, 2025
In January, President Biden signed into law the Social Security Fairness Act, significantly increasing benefits for nearly 3 million former public employees in the United States through Social Security retroactive payments.
This week the Social Security Administration (SSA) announced that back payments have been sent to over 1.1 million beneficiaries. These payments reflect the retroactive benefits owed to retirees, spouses, and surviving spouses due to the elimination of the Government Pension Offset (GPO) and Windfall Elimination Provision (WEP).
How This May Impact You:
- Retroactive Payments: As of March 4, over $7.5 billion in retroactive payments have been distributed to 1,127,723 individuals.
- Monthly Increases: Starting in April, beneficiaries will notice an increase in their monthly payments, corresponding to higher benefits for March.
Next Steps:
Beneficiaries can visit SSA’s dedicated website to learn more about the Fairness Act and see updates on the agency’s progress. The SSA is expected to release more details soon.
For any assistance or further inquiries regarding the Social Security retroactive payments, please do not hesitate to contact our team. We are here to help you navigate these changes and understand how they impact your benefits.
Categories: Other Resources
UPDATED 3/3/205 – BOI Reporting Reinstated: Latest Legal Developments
Feb 20, 2025
UPDATE 3/3/2025: FinCEN Not Issuing Fines or Penalties in Connection with Beneficial Ownership Information Reporting Deadlines, read FINCEN’s release here!
On Monday, February 17, a federal district court judge in Texas lifted the suspension on the Corporate Transparency Act, reinstating the requirement to report beneficial ownership information.
In a recent announcement from the Financial Crimes Enforcement Network (FinCEN), the deadline for most companies to submit their reports has been extended to 30 calendar days from February 19, 2025, setting the new due date to March 21, 2025.
FinCEN also mentioned plans to review the beneficial ownership information reporting requirements under the Corporate Transparency Act. This review aims to reduce the reporting burden on low-risk entities while focusing enforcement efforts on threats that pose significant risks to U.S. national security. The criteria for identifying low-risk companies remain unclear, but this evaluation will occur over the next 30 days.
For general details on BOI Reporting being reinstated, please visit William Vaughan Company’s BOI Insights & Resource Hub. For comprehensive guidance, we encourage you to visit FINCEN’s website.
Categories: Tax Compliance
President Biden Signs Into Law the Social Security Fairness Act
Jan 06, 2025
Law to boost social security payments for millions of public workers
On Sunday, President Biden signed the Social Security Fairness Act into law, significantly increasing Social Security benefits for nearly 3 million former public employees in the United States. This landmark legislation repeals two significant federal policies—the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO).
These policies previously prevented teachers, firefighters, police officers, and other government workers with pensions from jobs that didn’t contribute to Social Security from receiving full Social Security benefits. They also reduced benefits for those workers’ spouses and surviving family members. The repeal marks a meaningful step toward greater financial security for these individuals and their families.
What does this mean for you?
If you worked in a public sector position, you might qualify for higher Social Security benefits based on your work and pension history. Additionally, if you’re a spouse or survivor, your benefits could increase.
The enhanced benefits introduced by the Social Security Fairness Act would apply retroactively to December 2023. This means that payments for eligible individuals are expected to be backdated to January 2024.
Next steps?
The Social Security Administration is expected to release additional details about the implementation soon. We encourage you to stay informed by visiting their official page: https://www.ssa.gov/benefits/retirement/social-security-fairness-act.html
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Categories: Other Resources
UPDATED 12/27/24 – BOI Reporting Requirements Reinstated – Earliest Filing Deadline Now January 13, 2025
Dec 27, 2024
UPDATE 12/27/2024: BOI Whiplash? Fifth Circuit Reverses Course, Blocks BOI Reporting in reversal decision, read the full NFIB article here!
On December 23, 2024, a federal court of appeals lifted the injunction on the Corporate Transparency Act (CTA). Effective immediately, the Act’s BOI reporting requirements are reinstated.
In response to the court’s ruling, FinCEN has recognized the need for additional time to comply, therefore granting a 12-day extension so that most BOI filings are now due by January 13, 2025.
FINCEN issued the following alert:
In light of a December 23, 2024, federal Court of Appeals decision, reporting companies, except as indicated below, are once again required to file beneficial ownership information with FinCEN. However, because the Department of the Treasury recognizes that reporting companies may need additional time to comply given the period when the preliminary injunction had been in effect, we have extended the reporting deadline as follows:
- Reporting companies that were created or registered prior to January 1, 2024 have until January 13, 2025 to file their initial beneficial ownership information reports with FinCEN. (These companies would otherwise have been required to report by January 1, 2025.)
- Reporting companies created or registered in the United States on or after September 4, 2024 that had a filing deadline between December 3, 2024 and December 23, 2024 have until January 13, 2025 to file their initial beneficial ownership information reports with FinCEN.
- Reporting companies created or registered in the United States on or after December 3, 2024 and on or before December 23, 2024 have an additional 21 days from their original filing deadline to file their initial beneficial ownership information reports with FinCEN.
- Reporting companies that qualify for disaster relief may have extended deadlines that fall beyond January 13, 2025. These companies should abide by whichever deadline falls later.
- Reporting companies that are created or registered in the United States on or after January 1, 2025 have 30 days to file their initial beneficial ownership information reports with FinCEN after receiving actual or public notice that their creation or registration is effective.
- As indicated in the alert titled “Notice Regarding National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala.)”, Plaintiffs in National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala.)—namely, Isaac Winkles, reporting companies for which Isaac Winkles is the beneficial owner or applicant, the National Small Business Association, and members of the National Small Business Association (as of March 1, 2024)—are not currently required to report their beneficial ownership information to FinCEN at this time.
For general information regarding the CTA and BOI reporting requirements being reinstated, please refer to William Vaughan Company’s BOI Insights & Resource Hub.
Categories: Tax Compliance