Service
Quality of Earnings, Data Rooms and Due Diligence for D2C Fundraises
Pre-diligence cleanup and Quality of Earnings restatement, data room preparation, buy-side due diligence and support for valuation reports.
Diligence teams test the numbers a brand presents, and differences found late in a process cost time. This work prepares the numbers before investors see them, and reviews a target's numbers when a brand is the buyer.
Sell-side preparation
- Pre-diligence cleanup of books, tax filings and corporate records
- Quality of Earnings (QoE) restatement: the GMV-to-net-revenue bridge, cut-off provisions for returns after year end, unrecorded liabilities, stock write-downs and one-off add-backs
- Cohort retention figures checked back to order data
- Working capital normalised for seasonality and one-off movements
Data room
- A virtual data room (VDR) organised into financial, tax, GST and corporate folders
- Diligence queries answered from the same working papers
Buy-side due diligence
- Financial and tax due diligence on D2C acquisition targets
- Findings set out by their effect on price and on deal terms
Valuation support
- Financial models behind DCF valuations
- Coordination with the registered valuer or merchant banker for income-tax and FEMA valuation reports
What's included
- A QoE bridge and adjusted EBITDA with the working behind each adjustment
- A data room index and the documents behind it
- A diligence findings report for buy-side work
Valuation reports are issued by a registered valuer or merchant banker; deal outcomes depend on the parties.
Common questions
What is a Quality of Earnings review?
A Quality of Earnings (QoE) review restates reported profit to the figure an investor can rely on: revenue net of discounts, returns and GST, cut-off for orders that return after year end, unrecorded liabilities and stock write-downs, and one-off costs added back. The result is an adjusted EBITDA that diligence teams test.
Why do investors bridge GMV to net revenue?
Gross merchandise value includes GST, discounts and orders that are later returned or cancelled. Net revenue is what the business actually earns. Investors bridge one to the other so the revenue figure behind a valuation multiple is the same one the books report.
Do you prepare valuation reports?
We prepare the financial model and the information a valuer needs, and coordinate with the registered valuer or merchant banker who issues the DCF, income-tax or FEMA valuation report.