Understand the earnings. Examine the risks. Evaluate the purchase.
A potential acquisition deserves a closer look than the asking price and headline earnings. Figaro Advisory Group helps prospective business buyers examine financial performance, financing capacity, and the business conditions that may affect results after ownership changes.
Three ways to examine a business
Business Financial Review
A focused review of available financial information to understand reported performance, identify inconsistencies, and highlight questions that warrant further investigation. The review provides a practical starting point for deciding whether deeper analysis is appropriate.
Business Acquisition Analysis
A closer examination of the economics of a potential purchase. Analysis may include normalized earnings, seller’s discretionary earnings (SDE), proposed add-backs, acquisition assumptions, and debt-service coverage ratio (DSCR) to assess the relationship between cash generation, purchase structure, and financing obligations.
Business Acquisition Financial & Risk Analysis
A broader evaluation that combines acquisition financial analysis with operating dependencies, earnings transferability, and scenario and risk analysis. The focus is on how the business may perform under new ownership and what could change the financial outcome.
What we examine
Sustainable earnings
Review reported results, proposed adjustments, normalized earnings, and SDE. Examine whether add-backs are supported and whether the related costs may continue after the acquisition.
Financing capacity
Evaluate modeled cash flow and DSCR under stated financing assumptions. Consider the effect of debt payments, working-capital requirements, and ongoing business needs.
Business dependencies
Examine reliance on the current owner, key employees, and major customers, including how those relationships and responsibilities may transfer to a buyer.
Earnings transferability
Consider whether the business’s historical results depend on circumstances, relationships, or owner contributions that may change following a sale.
Scenarios and risk
Compare a base case with alternative operating and financing assumptions. Explore the effect of changes in revenue, margins, staffing costs, customer retention, and other material drivers.
A clearer basis for your decision
Our analysis identifies assumptions, open questions, and financial risks to support your decision-making. The scope depends on the business and the information available.