Buy Side & Sell Side Diligence

Identified concentration concerns and normalized EBITDA resulting in an overall increase.

Project-based IT consulting target.

  • Industry | Information Technology Consulting
  • Engagement | Quality of earnings review, related to potential financing arrangement
RedRidge triangle logo in red


A private equity firm providing strategic capital sourcing along with advisory services.


A management consulting company, specializing in IT and computer system consulting for private equity clients and their portfolio companies. Annual revenues exceeded $25 million.


Target recorded revenue and COS using a 4-4-5 calendar, while the remaining GL accounts were recorded on a calendar month-end.

Revenue was project-based and largely non-recurring in nature, therefore, historical financial results were not indicative of future performance.


Identified customer concentration concerns at Target, resulting in a recommendation that the Client consider the impact of revenue loss in conjunction with review of the project pipeline.

Normalized EBITDA to reflect historical sales adjustments in the period revenue was recorded, resulting in an overall increase in EBITDA.

Decreased EBITDA to reflect the impact of bad debt expense adjustments related to specific customers and a change in the allowance for doubtful accounts methodology during the period.

Adjusted EBITDA and NWC to reflect the accrued gross profit related to timing differences between the 4-4-5 month-end and calendar month-end.

Identified majority of the vital project managers at Target were classified as 1099 contractors, while meeting IRS classification requirements for W-2 employees, resulting in the recommendation that the Client consider the legal, tax, and financial impacts of converting 1099 contractors to W-2 employees.