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Quality of Earnings

Private equity value creation

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6 min read
Equity compensation in venture capital and private equity
When it comes to valuation of equity compensation in privately-owned companies, the OPM Backsolve method can be useful for companies with a complex capital structure with multiple classes of equity. Here's our overview of this best-practice method.
David Howell
Article June 19, 2017 6 min read

Private equity due diligence guidebook
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Transitioning your business

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2 min read
Having one good CEO isn’t good enough: Here’s what to do if you want your business to last
The key to seamless transitions, and organizational sustainability, is to find the best candidates (yes, plural) for leadership positions and fully prepare them, long before they assume their new roles. Here are some ideas for identifying your successors.
Gordon Krater
Article June 15, 2017 2 min read

Quality of Earnings Thought Leadership

  • Due diligence and state taxes: What you don’t know can hurt you
    A thorough pre-transaction analysis can help to eliminate surprises and allow the seller to correct deficiencies wherever possible.
    Michael Monaghan
    Article December 07, 2016 3 min read
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  • How rollovers can run afoul of anti-churning rules for intangibles
    If your business is acquired and you wind up with a greater-than 20 percent share of the buyer, pre-acquisition due diligence needs to make sure that the buyer’s ability to amortize intangible assets isn't limited.
    Michael Monaghan
    Article June 28, 2016 1 min read
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  • Due diligence and structuring issues for buyers of foreign subsidiaries
    Issues you need to consider when purchasing a business that owns a foreign subsidiary that’s classified as a foreign corporation for tax purposes.
    Kellie Becker
    Article May 02, 2017 3 min read
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  • Q&A on sell-side tax due diligence
    Sell-side tax due diligence not only can boost deal value but also establish credibility with a buyer, speed up the sale, and help get ahead in negotiations. Here's why it's become so popular.
    Robert Shefferly III
    March 24, 2016 1 min read
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  • Sale readiness and the value proposition of seller’s due diligence
    Thinking of selling your business? Careful transaction planning is critical to minimizing the risks and streamlining the transaction process. Use these three steps as your keys to unlock the value within your business.
    Article May 31, 2017 9 min read
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  • Due diligence and executive compensation: Supporting the reasonableness of salaries
    If you’re the acquiring business in a transaction, you should consider how the IRS will view pre-transaction payments to owners and officers. The Service may look to the “reasonableness” of those payments to determine if they were compensation or dividends.
    Michael Monaghan
    Article April 06, 2016 3 min read
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  • Portfolio acquisitions: Valuing intangibles
    If your private equity firm is performing the valuation of intangible assets of a portfolio company to satisfy the accounting requirements of ASC 805, our observations, best practices, and examples can help.
    Richard L. Lies, III
    Article February 03, 2016 9 min read
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  • Equity compensation in venture capital and private equity
    When it comes to valuation of equity compensation in privately-owned companies, the OPM Backsolve method can be useful for companies with a complex capital structure with multiple classes of equity. Here's our overview of this best-practice method.
    David Howell
    Article June 19, 2017 6 min read
    Image of person working
  • Volatility and value: Equity compensation
    A volatility factor helps estimate the potential for future increases in value, an important objective in many equity compensation plans. This discussion provides an overview of volatility and how it’s used to value equity compensation in a privately owned company.
    David Howell
    Article May 17, 2017 10 min read
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  • The value of equity-based compensation
    Total shareholder return plans, a form of performance-based equity compensation, are gaining widespread traction, offering companies and staff alike many advantages. Here's what you need to know.
    David Howell David Grubb
    Article October 07, 2016 12 min read
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Up Next

Whether you’re buying or selling a business, performing quality of earnings due diligence is critical to understanding the fine line between potential risk and reward. Our comprehensive financial due diligence services — including quality of earnings analysis, working capital assessment, tax compliance, tax structuring analysis, and purchase price allocation analysis — help you make more informed decisions.

For buyers, we help determine if the seller’s information is accurate. We dig deeper to give you the complete story behind the numbers, assessing the company's historical financial performance and condition, identifying key drivers of trends, and uncovering weaknesses and future growth opportunities. We also help you reduce risk by minimizing your potential tax exposure.

For sellers, we strategize opportunities to maximize the transaction value, identify and remedy potential exposure areas, help prepare management for the acquisition, and expedite the sale process. We look beyond the reported financials and provide insights into earnings, quality of working capital, and liabilities to improve buyer and lender confidence.

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Our clients say

Plante Moran’s transaction advisory services helped us identify and validate investment opportunities and define and mitigate potential risks, avoiding surprises post-closing. Their audit and tax teams tailor their approach and solutions to ensure our portfolio companies are implementing best-in-class financial reporting practices and proactive tax strategies to optimize after-tax cash flows. Plante Moran’s “one-firm” firm approach is particularly useful for private equity groups like ourselves due to the access to the full resources of the firm, whether it be tax, audit, valuation, or various consulting needs. There’s always someone with the right expertise and experience to respond to our needs.

Richard J. Harpster Managing Director, Svoboda Capital Partners

Our Team

Our financial due diligence team brings you extensive knowledge and M&A expertise. Our multidisciplinary professionals have diverse backgrounds, including traditional audit and tax, corporate management, and investment banking. Our teams also include industry experts based on the specific needs of your transaction. This highly personalized approach ensures you gain the experience, resources, and guidance to lessen uncertainty and maximize transaction value.