Buy-Side Confidence: M&A Diligence for a Software Rollup

Executive Summary

Smart acquisitions require deep validation. A Denver-based software holding company was looking to acquire a competitor for $10M. The target claimed $2M in EBITDA. Fynex Global performed a Quality of Earnings (QofE) analysis and discovered that $500k of revenue was one-time implementation fees, not recurring. We negotiated a price reduction based on the 'Quality' of the revenue.

The Landscape: Vertical SaaS Context

In M&A, EBITDA adjustments are where the battle is fought. One-time expenses should be added back; recurring ones shouldn't.

The Breaking Point

"Their P&L looks great, but I don't trust it."

PE Group

Private Equity Sponsor

HoldCo

The deal was set to close in 14 days.

The Fynex Protocol

We rebuilt the target's P&L from the bank statements up. We tested revenue proof of cash.

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Technical Implementation

We analyzed the churn rate of the cohort.

Verified Outcomes

Purchase Price Savings

Audited

We advised the client to lower the bid by $2M. The seller accepted.

Future Horizon

Post-merger integration.