Transaction Advisory & Business Event Readiness
Quality of earnings, financial due diligence, purchase price allocation, and audit-ready financials for companies preparing to sell, buy, raise capital, or go public. We find what a buyer finds, while you still have time to fix it.
In Short
Transaction advisory services prepare a company's financial records and accounting positions for a major event. That means a sale, acquisition, capital raise, IPO, or carve-out. So six deliverables carry most of the work: a quality of earnings report, financial due diligence, purchase price allocation under ASC 805 or IFRS 3, pro forma financial statements, accounting standard implementation, and audit preparation. GreenGrowth CPAs holds PCAOB registration and AICPA membership. We have advised buyers and sellers across cannabis, technology, real estate, life sciences, nonprofits, and professional services since 2016.
Who This Is For
You Probably Need Transaction Advisory If
What Transaction Advisory Actually Changes
Deals rarely fall apart over price. Instead they break in diligence. Typically that happens when a buyer finds something the seller never knew was there. Revenue recognized in the wrong period. Add-backs nobody can support. A related party arrangement nobody ever papered. Inventory that does not tie to the system of record.
Each of those becomes a price reduction, an escrow holdback, or a walk-away. So the value of transaction advisory work is not the report. It is finding those items while you still control the timing.
A prepared seller sets the terms, because the numbers are already defended. In effect a sell-side quality of earnings report puts your adjusted earnings on the table with support behind every add-back. Otherwise the buyer's team defines what counts. For CPA firm owners specifically, see our succession planning services.
Independent financial due diligence tells you whether the earnings you are paying a multiple on are real and repeatable. And whether they belong to the business or the owner. That analysis routinely changes the price.
Planning a sale, acquisition, raise, or IPO?
A transaction readiness assessment tells you what a buyer finds, before they find it.
What We Deliver
Transaction Advisory Services
Six core workstreams. Generally most engagements use two or three, since we scope to the transaction rather than sell a bundle.
Buy Side & Sell Side
Quality of Earnings Reports
A quality of earnings report tests whether reported profit reflects the real, repeatable economics of the business. Serious buyers rely on it. Increasingly, sellers produce one first so that they control the number.
The work centers on normalizing earnings. That means separating what the business genuinely earns from what the accounting showed.
- Revenue quality by customer, contract, and when it was recognized
- Owner compensation, discretionary spend, and one-time items, each tested rather than accepted
- Working capital analysis and the normalized peg that lands in the purchase agreement
- Customer concentration, churn, and whether revenue actually lasts
- Proof of cash, because reported earnings must tie back to bank activity
The working capital peg is where sell-side reports earn their fee. Both sides negotiate it from historical averages. Consequently a seller without independent analysis usually accepts the buyer's calculation.
Buyers and Investors
Financial Due Diligence
This work verifies what a target claims, before you commit contractually. It runs broader than a quality of earnings report, because it answers a different question. Not only what the business earns, but what you inherit.
- Historical performance, and whether the underlying records hold up
- Balance sheet quality, since receivable collectability and inventory existence both get tested
- Off balance sheet obligations, contingent liabilities, and open tax exposure
- Related party arrangements, and whether they survive the transaction
- Contracts, leases, and licenses that need consent to transfer
Buyers underweight open tax positions more than any other item, although they should not. After all, a buyer inherits them. So an aggressive position taken three years ago becomes the acquirer's problem after closing.
Post-Close Accounting
Purchase Price Allocation
This process assigns acquisition consideration across acquired assets and liabilities at fair value. So any excess becomes goodwill. ASC 805 requires it under US GAAP, IFRS 3 internationally.
The allocation is not administrative, because it follows the numbers forward. It sets future depreciation and amortization, which flow into reported earnings for years. Moreover it drives goodwill impairment testing thereafter.
- Valuation of acquired intangibles: customer relationships, technology, trade names
- Fair value measurement of tangible assets and assumed liabilities
- Goodwill determination and the documentation an auditor tests
- Useful life determinations that set the amortization schedule
Capital Raises and Combinations
Pro Forma Financial Statements
These statements show the financial position under a proposed transaction, as though it already happened. Investors, lenders, and regulators all ask for them, although each expects something slightly different.
- Combined statements reflecting an acquisition or merger as if it closed at period start
- Adjustments for financing structure, purchase accounting, and eliminations
- Carve-out presentations for a division being separated from a parent
- Clear documentation of every assumption, since reviewers challenge assumptions first
Carve-outs are the hardest version, because the entity you present often never existed alone. So you allocate shared costs on a defensible basis, then disclose it.
Cross-Border and Pre-IPO
GAAP and IFRS Implementation
Companies going public, expanding internationally, or selling to a foreign buyer often need to convert their accounting framework. The gap runs wider than management expects, because private reporting tolerates judgment that public reporting does not.
- Conversion between US GAAP and IFRS, including the opening balance sheet
- Revenue recognition under ASC 606 or IFRS 15, documented rather than assumed
- Lease accounting, impairment testing, and how intangibles get treated
- Stock-based compensation, where historical valuations rarely hold up
- Written accounting policies, which most private companies never produced
Before the Auditor Arrives
Audit Preparation
A first audit disrupts more than most teams expect. Therefore preparation pays for itself. Audit preparation front-loads the work, so fieldwork runs shorter and costs less.
- Account reconciliation and cleanup across every material balance
- Documentation of accounting policies and the significant judgments behind them
- Support packages for the areas auditors always test
- Internal control walkthroughs, then remediation of obvious gaps
If the audit supports an SEC filing, the auditor must sit on the PCAOB register and independence rules apply. A firm that prepared your books generally cannot audit them. So preparation and audit stay separate engagements. Our IPO readiness and audit page covers that in detail.
Need a quality of earnings report or diligence support?
Talk with our transaction advisory team about scope, timing, and what to address before the deal moves forward.
Where This Applies
Transaction Advisory Across Business Events
IPO & Going Public
Audited statements, accounting standard implementation, and registration support. Most issuers present two years of PCAOB-audited financials. Prior years carrying a private company opinion usually need reaudit.
M&A Transactions
Buy-side and sell-side quality of earnings, due diligence, working capital analysis, and purchase price allocation after close.
Capital Raises
Pro forma statements, investor-ready reporting, and the documentation lenders and equity investors ask for at every stage.
Restructuring & Carve-Outs
Standalone financials for a division that never operated alone, allocating shared costs on a documented basis.
First Audit
Preparation for a first independent audit, whether a lender, an investor, a benefit plan threshold, or a federal award triggered it.
International Expansion
IFRS conversion, cross-border reporting, and framework alignment for companies operating or listing outside the United States.
Industry Specifics
What Diligence Finds in Your Industry
Generic diligence misses what matters in a specialized business. Accordingly, here are the issues that surface most often, by sector.
| Industry | What a Buyer Finds | Why It Moves the Price |
|---|---|---|
| Cannabis | IRC 280E positions, COGS allocation, license transferability | An aggressive prior-year position transfers to the buyer, and licenses need regulator approval to move |
| Technology | ASC 606 recognition, deferred revenue, capitalized software | Revenue recognized early inflates the multiple base, and buyers routinely write deferred revenue down |
| Real Estate | Cost segregation recapture, entity structure, related party leases | Accelerated depreciation reduces basis, so recapture on sale runs far larger than owners expect |
| Life Sciences | R&D capitalization, milestone revenue, grant accounting | Capitalizing costs that belonged in expense inflates both assets and reported earnings |
| Nonprofits | Restricted funds, federal award compliance, single audit findings | Prior single audit findings and unspent restricted funds constrain what a successor can do |
| Professional Services | Owner dependence, client concentration, work in progress | Revenue tied to one person may not transfer, which becomes a direct multiple discount |
GreenGrowth CPAs runs transaction advisory work across cannabis, technology, real estate, life sciences, and nonprofits, so the diligence reflects how your sector actually works.
Timing
When to Start Transaction Advisory Work
Earlier engagement consistently produces better outcomes, because early problems stay cheap whereas late problems get priced into the deal.
12 to 18 Months Out
The right window for an IPO or a significant M&A exit, since structural fixes take time. Enough time to implement accounting standards, complete historical audits, and fix anything structural.
3 to 6 Months Out
Usually workable for a mid-market sale. Enough to produce a sell-side quality of earnings report, clean the balance sheet, and build a proper data room.
Under 90 Days
Reactive, although not hopeless. Scope narrows to a quality of earnings report, a working capital analysis, and triage of whatever diligence will surface first.
Why Choose GreenGrowth for Transaction Advisory
GreenGrowth CPAs holds PCAOB registration and AICPA membership, including the Governmental Audit Quality Center and the Employee Benefit Plan Audit Quality Center. Since 2016 we have served more than 1,500 clients. Offices sit in Irvine, Los Angeles, San Rafael, New York, and Texas.
Furthermore, most of our work sits in sectors where the accounting genuinely differs. Cannabis under IRC 280E. Real estate with cost segregation and entity layering. Technology with deferred revenue. Nonprofits under Uniform Guidance. Diligence there surfaces issues a generalist meets for the first time on your deal, at your cost.
Where an audit supports an SEC filing, a firm that prepared the financials generally cannot audit them. Therefore we say early which role we can hold, rather than raising it during diligence. See our audit and assurance services and our outsourced CFO services.
The Assessment
A transaction readiness assessment reviews your position against what a buyer, investor, or auditor actually tests. It names the items most likely to reduce price or delay closing. Then it tells you which ones fit your timeline, and scopes the work. No cost, about an hour.
Common Questions
Transaction Advisory FAQs
The Basics
What is transaction advisory?
Transaction advisory covers the financial, accounting, and reporting work required before, during, and after a major business event such as a sale, acquisition, capital raise, IPO, or carve-out. Core deliverables include a quality of earnings report, financial due diligence, purchase price allocation, pro forma financial statements, accounting standard implementation, and audit preparation.
What is a quality of earnings report?
A quality of earnings report tests whether reported profit reflects the actual, repeatable economics of a business. It normalizes earnings by separating genuine performance from one-time items, owner discretionary spend, and recognition timing. Buyers use it to validate a target. Sellers increasingly produce one first, to define the adjusted earnings figure before the buyer's team does.
How is a quality of earnings report different from an audit?
An audit gives an opinion on whether financial statements are fairly presented under an accounting framework, looking backward at a completed period. A quality of earnings report looks at economic sustainability and transaction value, testing add-backs, working capital, revenue durability, and customer concentration. Buyers usually want both, and one does not substitute for the other.
Buy Side and Sell Side
Does GreenGrowth CPAs work for both buyers and sellers?
Yes. On the sell side we prepare quality of earnings documentation, clean up financials, and assemble the reporting a diligence process requires. Conversely, on the buy side we perform independent financial due diligence to verify a target's performance and identify risks before closing. We do not act for both sides of the same transaction.
What is a working capital peg and why does it matter?
The working capital peg is the normalized level of working capital a buyer expects to be delivered at closing, set out in the purchase agreement. Delivering below the peg reduces proceeds dollar for dollar. It is negotiated from historical averages, and a seller without independent analysis usually accepts the buyer's calculation, which is rarely the most favorable one available.
What is purchase price allocation and when is it required?
Purchase price allocation assigns the total consideration in an acquisition across acquired assets and liabilities at fair value, with any excess recorded as goodwill. It is required under ASC 805 for US GAAP and IFRS 3 internationally. The allocation determines future depreciation and amortization, so it affects reported earnings for years after the deal closes.
Timing and Standards
When should we start transaction advisory work?
For an IPO or significant M&A exit, 12 to 18 months before the expected event. That allows time to implement accounting standards, complete historical audits, and address structural issues. For a mid-market sale, 3 to 6 months is usually workable. Under 90 days the scope narrows to a quality of earnings report and triage of the items most likely to surface in diligence.
What is the difference between GAAP and IFRS for a transaction?
The frameworks differ on business combinations, inventory valuation, lease accounting, impairment testing, and intangibles, among other areas. Revenue recognition under ASC 606 and IFRS 15 is largely converged. Companies listing on a foreign exchange, expanding internationally, or being acquired by a foreign buyer may need to convert between the two, which includes preparing an opening balance sheet under the new framework.
Can the firm that prepares our financials also audit them?
It depends on which audit. Under SEC and PCAOB standards the answer is no, since those rules prohibit auditing statements the firm helped produce. In a private company audit driven by a lender, investor or board, the AICPA framework is different and often permits both, provided management takes responsibility for the records and appropriate safeguards are documented. GreenGrowth CPAs delivers bookkeeping, outsourced CFO, tax and audit, so we establish which combination your situation permits at the outset.
Working With GreenGrowth CPAs
What does a transaction readiness assessment include?
It reviews your current financial position against what a buyer, investor, or auditor will actually test, identifies the items most likely to reduce price or delay closing, tells you which are fixable within your timeline, and scopes the work required. Cost is nothing, and it usually takes about an hour.
Which industries does GreenGrowth CPAs support?
Cannabis, technology, real estate, life sciences, nonprofits, professional services, high net worth individuals, and school districts. Sector experience matters in diligence, because the issues differ: IRC 280E positions and license transferability in cannabis, deferred revenue and ASC 606 in technology, cost segregation recapture in real estate, restricted funds and single audit findings in nonprofits.
Find Out What a Buyer Will Find
A transaction readiness assessment reviews your position against what diligence actually tests. Then it tells you what to fix while fixing it stays cheap. No cost, about an hour.
Request a Transaction Readiness Assessment