Financial Advisory Services TRANSACTION & VALUATION SERVICES

Financial Advisory Services TRANSACTION & VALUATION SERVICES

Meet Weaver Founded in 1950, Weaver is the largest independent accounting firm in the Southwest. With nearly 600 employees in nine U.S. offices, Weaver offers our clients the best of both worlds: the resources, depth of knowledge and industry-specific experience you expect from a national firm, with the hands-on, personal level of service offered by a smaller firm with local resources. Financial Advisory Services for Growing Companies, Private Equity Firms and Lenders Our experienced Financial Advisory Services team utilizes proven processes and tools to evaluate businesses from a financial accounting, tax and information technology perspective. In addition to providing clients with independent, supportable documentation, Weaver s team can help identify and resolve hidden risks to prevent unforeseen delays and unexpected surprises, as well as provide points of negotiation in the execution stage. Weaver s Financial Advisory Services team combines national firm expertise and capabilities with the client service of a smaller firm. We provide private equity firms, their portfolio companies, family offices, independent sponsors and mezzanine firms with trusted advice and financial information. Private equity investors turn investments into catalysts for growth. At Weaver, we are dedicated to helping private equity firms, business owners and investors realize significant value from each transaction. We can help provide critical deal findings in a time-sensitive environment, and we customize our scope and approach to meet our clients needs. We go beyond performing due diligence assistance to deliver services throughout the transaction and investment life cycle. Every one of our clients receives senior-level service, high-quality results and unparalleled value. 2

Why Weaver? Widely recognized for delivering exceptional attention to detail, Weaver is also known for its personal level of service. Our team is nimble, responsive, and delivers a high level of expertise in a more cost effective manner than larger, national firms. Weaver s FAS practice is always seeking out ways to provide our clients a competitive edge and sourcing deal flow. Financial Advisory Services clients can rely on our team for continuous support throughout an engagement from initial due diligence and valuation to ongoing services such as annual goodwill impairment testing. By working with Weaver, your company will benefit from an efficient transaction process that enables you to focus exclusively on your core business. Key Areas for Analysis: Transaction Services Quality of earnings Accounting processes Working capital analysis Tax compliance and structuring IT applications IT infrastructure Valuation Services Purchase price allocations Goodwill impairment Stock options and warrant valuations Fresh start accounting Mergers and acquisitions Estate and gift tax valuations 3

Transaction Services at a Glance Weaver s Transaction Services performs a variety of financial and tax due diligence engagements with transactions ranging from $1 million to over $500 million in transaction value for companies across many industries throughout the country. Buy-Side Financial Due Diligence In a business world where sellers usually have the information advantage, effective due diligence is critical to making informed decisions and managing risks associated with a contemplated transaction. Starting with a thorough assessment of the quality of earnings, Weaver s rigorous due diligence process enables buyers to rationally decide whether a deal makes sense from a go/no-go perspective, understand potential deal-breakers, and ultimately, assess the overall value of the transaction. It can also help buyers avoid critical mistakes that lead to poor decisions and the destruction of value. At Weaver, we think like an investor. Our buy-side due diligence services are tailored to help both strategic and financial investors overcome certain risks and gain a more complete understanding of a target s financial situation, analyze adjusted earnings, and identify risks related to corporate governance. Additionally, our core services, specific benchmarking and strategic profitability analyses are designed to locate and uncover hidden value drivers within deals, allowing a buyer to maximize return on an investment. SERVICE Assess quality of earnings Analyze business driver trends Identify and understand balance sheet risks and exposures Understand and identify cash flow considerations Analyze forecast assumptions BENEFIT Understand normalized earnings and certain GAAP deficiencies Determine what is driving revenue growth (or decline) and identify main drivers of earnings Reveal unrecorded liabilities or overvalued assets (e.g., obsolete inventory, unaccrued liabilities) Clarify expenditures (e.g., capital expenditures on new equipment) to better assess future cash flows impacting the buyer s valuation model Understand how current estimates bridge to actual results 4

Sell-Side Financial Due Diligence Improving the quality of a company s financial reporting and accounting records can significantly enhance a deal s value. Weaver s assistance in the selling process brings transparency to accounting processes and documentation in advance of marketing a deal. Advance planning can potentially help improve the final transaction price of the seller s investment and minimize the negative impact from purchase price adjustments and increase the efficiency and speed to close. Getting ahead of potential investors with a financial due diligence report can accelerate the diligence process and get to close sooner. Sell-side financial due diligence allows sellers to address concerns and issues that may be relevant to even the most demanding purchaser. If going public is a goal, sell-side due diligence can assist in IPO readiness. For sellers undertaking a disposal or selling off a segment of their business, seller assistance provides solutions to assist in successfully completing divestments, such as divestiture strategy and financial statement carve-outs. SERVICE Perform a pre-sale analysis of the seller s financial data Assist in the preparation of the information memorandum and transaction data room Perform a cost and synergy analysis Maintain a consistent basis of accounting for due diligence information and financial schedules Respond to buyer s due diligence questions BENEFIT Identify any potential issues in an effort to avoid broken deals or decreased valuations Facilitate efficiency of the due diligence process Identification of carve-out costs Create efficiencies during the due diligence process Provide support to the seller throughout the engagement to streamline the due diligence process Tax Due Diligence Understanding the tax implications of a transaction and establishing the best tax structure is critical to the success of most transactions. Our team works to recognize and quantify tax exposures and provide interpretations of how these exposures can affect a transaction. We can uncover critical information needed to effectively align tax structures while identifying tax saving opportunities post-deal. An in-depth tax due diligence also lays the ground work for later disposals, reorganizations and exits. 5

Tax Due Diligence (continued) During the process, we gather information through a detailed review of the company s historical tax returns, financial statements, audit history, research and planning memorandums, and through discussions with the company s tax compliance and planning teams. Weaver s tax due diligence services can uncover key information in the following areas: U.S. federal tax State and local income tax State sales and use tax Personal property tax International tax Foreign tax Payroll tax Transfer pricing IT Due Diligence With extensive experience as IT auditors and consultants, our IT due diligence team has the insight to make meaningful and relevant recommendations on the IT aspects of a transaction. We identify high-impact areas that guide deal value, helping to maximize opportunities and minimize risk. During our review, we focus on the operational aspects of the target s IT systems and related organization to: Determine the compatibility and scalability of systems to fulfill post-deal objectives. Identify unrealistic improvement programs or under-performing projects. Quantify deferred investments in systems and infrastructure. Assess the quality of IT personnel. Evaluate compliance or security deficiencies that could result in significant costs. Determine cost savings opportunities that result from improved management of procurement and contracts. Our findings arm you with significant information about the quality of the target s internal systems and IT organization, enabling your deal analysts to adjust the value of the transaction accordingly. Our evaluation includes such IT focus areas as: Significant applications Critical databases Data center assets Telephone systems Network infrastructure IT support Personnel Strategy alignment and compatibility Process and workflow Additionally, we assist with carve-outs, transition service agreements and post-deal integration synergy estimates, as well as better understanding of stand-alone costs. 6

Representative Due Diligence Experience / Mezzanine Lender INDUSTRY TYPE: Manufacturing Debt provider Manufactures and constructs platforms and tools for railroads $5 million - mezzanine debt INDUSTRY TYPE: Software - residential construction Buy-side diligence B2B software in residential construction $27 million - stock acquisition INDUSTRY TYPE: Waste management Sell-side diligence Provider of recycling and waste hauling services $10 million - senior debt financing INDUSTRY TYPE: Manufacturing & distribution Buy-side diligence Manufacturer and distributor of pulley systems and conveyor belt machines $50.5 million acquisition INDUSTRY TYPE: Manufacturing - transportation & logistics Buy-side diligence Manufactures, refurbishes, and services custom heavy trailers $34 million - asset acquisition INDUSTRY TYPE: Manufacturing & distribution - aviation Buy-side diligence Manufactures bushings and components used in aviation construction $5 million - asset acquisition INDUSTRY TYPE: Software - education Asset management software for schools and school districts $10 million - stock acquisition INDUSTRY TYPE: Oilfield services - transportation Buy-side diligence Transport and hauling of crude oil $32 million - stock acquisition INDUSTRY TYPE: Technology & telecommunication Buy-side diligence Provides bundled video services to educational institutions $48 million 7

Valuation Services at a Glance Weaver s professionals provide valuation analyses in connection with financial reporting compliance, tax planning and compliance, merger and acquisition assistance, and corporate or litigation consulting. Our experienced valuation professionals combine finance and accounting expertise with sophisticated valuation methodologies to fulfill even the most complex financial reporting and tax requirements. Our valuation opinions are fully defensible and carefully documented to withstand scrutiny from a variety of regulatory bodies, including the Securities and Exchange Commission and the Internal Revenue Service. What Necessitates a Valuation? Beyond the fundamental fact that reliable valuations are necessary to understand the value exchanged in a transaction, many accounting and financial reporting regulations require valuations to be performed on an ongoing basis. In addition, transactions including mergers and acquisitions and internal asset transfers require a valuation of the underlying assets for tax planning and compliance reasons. Valuations also play a key role in litigation, audit and other corporate strategic planning issues. 8

Valuation Services Purchase Price Allocation Valuations In accordance with Accounting Standards Codification (ASC) 805, Business Combinations, purchase price allocations account for business combinations by recognizing the costs of acquisitions and liabilities assumed and separately recognizing intangible assets based on their fair values. Weaver has considerable experience providing clients with independent and defensible valuation analysis associated with business combinations. Goodwill Impairment and Other Intangible Assets In accordance with ASC 350, Intangibles Goodwill and Other, intangible assets with indefinite lives, such as trade names, should be tested annually. Additionally, according to ASC 350, goodwill at the reporting unit level must be examined or tested at three different times: (1) at the beginning of the fiscal year in which ASC 350 was applied; (2) when an event occurs that potentially has a negative impact on the value of the reporting unit, which could include adverse changes in business climate, personnel, competition, regulations and/or legal issues; and (3) annually. Tax Valuations Tax strategies are becoming increasingly complex and, more than ever, are being scrutinized by regulatory authorities. We provide both corporate clients and personal clients (gift and estate taxes) with an objective and supportable analysis. Tax valuation services are available for C-corporations, S-corporations, limited liability corporations, partnerships and proprietorships. To help companies navigate changing tax laws and regulations, Weaver s team has the necessary expertise to form defensible valuation positions. Merger and Acquisition Weaver provides consulting to clients on the financial prospects of target companies, developing a list of comparable company values and developing discounted cash flow models and other analyses in support of an offer to purchase a business. Intellectual Property Companies require intellectual property valuations for numerous reasons, including pricing and strategic purposes, financing purposes and tax compliance and financial reporting purposes. We understand the valuation of intangibles and intellectual property, which often includes such assets as marketing efforts and customer relationships as well as contract and technology intangible assets. We provide our clients with an estimation of the useful lives of the identified intangible assets and assist in determining market royalty rates. A9

Valuation Services (continued) Option and Warrant Valuations Determining the value of option contracts depends on a number of variables and requires the use of complex formulas that can lead to varying opinions of value. Under ASC 718, Compensation Stock Compensation, all publicly traded companies are required to expense stock-based compensation. Weaver helps clients improve their options expense estimations with generally accepted valuation techniques that result in a defensible analysis. Fresh Start Accounting Fresh start accounting can be challenging. Companies can benefit most from Weaver s responsive service approach and broad-based technical knowledge. For example, ASC 852, Reorganizations, (formerly SOP 90-7) requires a company emerging from bankruptcy to restate its balance sheet at fair value and allocate the revalued balance sheet in accordance with ASC 805. We have significant experience providing financial reporting valuations based on the rules and guidance established in ASC 805. Employee Stock Option Plans (ESOPs) Weaver understands the importance of accurate planning, valuation and review of your Employee Stock Option Plans. One of the leading mistakes in ESOP valuation occurs in the infancy of the engagement. Weaver makes it a point to understand the background and complexities of the ESOP before beginning our work. We meticulously consider all relevant facts in order to conclude an accurate and defensible value. Utilizing a number of approaches, we develop our assessment based on up-to-date market data from a number of service providers ensuring the fairness and precision of our conclusions. After we complete our analysis, we review our assumptions and presentation with the client. According to ERISA, One of the most common violations found is the incorrect valuation of employer securities. We understand the importance of a sound valuation and utilize the review process as another source to ensure the accuracy of the valuation. 10

Representative Valuation Experience INDUSTRY TYPE: Collection & disposal of refuse Provides disposal services and accepts traditional, non-hazardous waste types; additionally, operations focus on waste disposal by rail Purchase price allocation valuation $43 million acquisition INDUSTRY TYPE: Technology & telecommunication Provides bundled voice and data communication services to educational institutions Valuation for S-Corp conversion Approximately $19 million in revenues INDUSTRY TYPE: Materials handling & logistics services Company operates terminals in 19 different states Purchase price allocation valuation $84 million acquisition INDUSTRY TYPE: Specialty manufacturer and retailer Company specializes in the conversion, sale and rental of handicap accessible vans Purchase price allocation valuation $39.9 million acquisition INDUSTRY TYPE: Plumbing, heating & air conditioning Privately held company specializing in designing, engineering, and installing complete comport systems Purchase price allocation valuation $73.5 million acquisition INDUSTRY TYPE: Manufacturing Manufacturer of water and drainage pipe and products in U.S. and Eastern Canada Purchase price allocation valuation Approximately $1.5 billion in revenues CLIENT: Estate CLIENT: Estate CLIENT: Estate INDUSTRY TYPE: Real estate development Developer and financing agent of residential developments Gift and estate tax valuation $30 million total estate INDUSTRY TYPE: Oil & Gas Privately held oil and gas production company that focuses on the acquisition of marginal gas wells in Texas, Louisiana and Oklahoma Valuation of stock options and intangible assets $75 million total estate INDUSTRY TYPE: Financial services, banking An independent bank with current locations in North Texas Estate and gift tax valuation $1.3 billion in total assets 11

CONTACT US BRIAN REED, CPA/ABV Partner-in-Charge, Financial Advisory Services & Private Equity Practice Leader 972.448.6936 brian.reed@weaver.com KACI HOWELL, CPA/ABV, CVA Director, Valuation Services 832.320.3201 kaci.howell@weaver.com RYAN IRBY, CPA Senior Manager, Transaction Services 972.448.9274 ryan.irby@weaver.com JENNIFER GRETT Business Development Director 972.448.9270 jennifer.grett@weaver.com weaver.com