Raising the standard in transaction diligence.
Virtus Partners, Inc. is an investment firm that buys and operates middle market businesses across various industries. Excessive costs and disappointing results from transaction service providers led us to bring these processes in house and achieve full vertical integration.
The results of vertically integrating have been exceptional. Our transaction diligence services are now available externally to select clients.
We found these problems to be ubiquitous across traditional QoE providers:
The incentives are misaligned. QoE providers are incentivized to prioritize efficiency over accuracy.
They have no skin in the game. They have no ownership of the transaction outcome.
They provide surface level analysis. They check a box. They provide enough to appease lenders but fall short of the in depth analysis required to strategically plan for growth.
They lack operating experience. They analyze financial data like accountants, not operators. There is nuance in numbers. They fail to highlight strategically important details because they fail to even recognize them. They have never operated.
They're overpriced.
So, we took our QoE in house and the output was vastly more valuable than anything we'd received from an external service provider.
After sharing the success of our in-house process with industry peers, we were inundated with requests for our services. We've bolstered our internal team and now provide our transaction diligence services to select clients with whom we feel aligned with and can work with on a consistent basis.
We underwrite as operators.
We produce higher quality deliverables, and we leverage our operating expertise to embed our analysis with strategic insights, and because this is not our primary revenue stream, we are a fraction the cost of traditional service providers.We view transaction diligence through the lens of deep operating and investment underwriting experience. Our QoE provides a reliable foundation upon which you can build and validate your investment thesis.
Our turnaround times are unparalleled.
Assuming we have all the necessary documentation, we're capable of extraordinarily fast turnaround times. We understand the importance of expeditious diligence processes and we will never be a transaction bottleneck.
There are two primary reasons our incentives are aligned with yours:
We built these processes to ensure the success of our own investments.
We remain beside you post-acquisition offering growth focused strategic advising. We draw upon our experience averaging 68% YoY growth in our established portfolio companies the year after closing to help you achieve similar outcomes.
Typical deliverables include:
Executive Summary
Key Findings and Conclusions
Overview of financial health and risk areas
Historical Financial Analysis
Adjusted EBITDA
Revenue trends and drivers
Customer concentration analysis
Gross Margin Analysis
Normalization Adjustments
Identification of non-recurring, non-operational, or one-time income and expenses
Adjustments to historical financials for a clearer view of ongoing profitability
Revenue Quality
Assessment of revenue recognition policies and practices
Analysis of customer contracts and pricing stability
Sales channel performance and sustainability of revenue streams
Cost Structure Analysis
Breakdown of direct costs and operating expenses
Evaluation of fixed vs. variable costs
Analysis of cost-saving opportunities
Working Capital Analysis
Trends in working capital components (accounts receivable, accounts payable, inventory)
Determination of normalized working capital requirements
Balance Sheet Quality
Review of key assets and liabilities
Assessment of the adequacy of reserves (e.g., bad debt, inventory obsolescence)
Cash Flow Analysis
Historical cash flow from operations
Analysis of cash conversion cycle and free cash flow
Debt & Financing
Review of existing debt obligations, covenants, and off-balance-sheet liabilities
Understanding the impact of financing on future cash flows
Tax Considerations
Analysis of tax compliance, outstanding obligations, and tax strategies
Identification of potential tax liabilities or benefits
Risks & Opportunities
Identification of key risks affecting earnings quality
Opportunities for
revenue growth, cost savings, and realizable synergies
Supporting Schedules and Appendices
Detailed reconciliations and adjustments to financial statements
Key assumptions used in financial adjustments and analyses
