Does anyone know of a good QofE rec in the food manufacturing space?

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August 07, 2019

by a searcher from Northwestern University - Kellogg School of Management in Minneapolis, MN, USA

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Reply by a searcher
from Columbia University in Tampa, FL, USA
In my experience, it may depend on how large the deal is. If you are targeting very small deals with less sophisticated financial systems there is less for a Q of E to do because there is just less data recorded. For example, I find it is very often the case with businesses less than $2 million of EBITDA that the owner manipulated the recorded inventory values on taxes as a tax avoidance strategy. This is particularly thorny if they don't have physical inventories to refer back to. On these transactions, sometimes I'll do a "Mini QofE" or just try to recreate some of the purposes of the QofE myself. The Mini QofE I define as i) matching the cash deposits in bank accounts to sales posted to the internal books, an interview with the seller on accounting and sales recognition practices, a review of the general ledger for abnormalities and a discussion of possible timing / period correction errors. If you limit the scope in a very small business, I believe you can find a professional firm to help you with it for less than $10k. I've had a good experience with Jeff Sackman at Rubin Brown and wouldn't hesitate to recommend him.
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Reply by a searcher
from University of Akron in Raleigh, NC, USA
There can be a lot of volatility/risk in the recurring revenue of food manufacturers based on both customer mix and production capabilities alignment with fast-changing market trends. I’m a former Founder/CEO in the space. Reach out if you need diligence or perspective on those areas. Happy to help. redacted
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