Clarifying Financial Performance to Support a Strategic Business Transition
Situation
The client, a cargo service provider, engaged a Lauber Business Partner to perform a Quality of Earnings (QoE) analysis as the company prepared to work with its investment banking partner as it considered a potential strategic transaction.
However, the company faced a significant challenge. Over several years, the business had struggled to produce consistently reliable monthly financial statements. Key adjustments were often made at year-end, making it difficult for leadership—and potential buyers—to clearly understand the company’s true monthly profitability and operational performance. In addition, the historical financials likely needed to be adjusted for non-recurring costs and owner-related expenses that would not recur under a different owner.
Without a clearer financial picture, it would be challenging to properly evaluate the company’s enterprise value and profitability trends.
Lauber’s Approach
Lauber began by developing a deep understanding of the company’s:
Working closely with the company’s Controller, the Lauber Business Partner:
During the process, the owner began seriously considering shutting down a major segment of the business. Lauber helped the leadership team evaluate this potential decision by modeling the financial impact of discontinuing those operations.
By working collaboratively with the Controller, Lauber developed financial analyses showing how the changes would affect:
Results
The analysis provided leadership with a clearer understanding of the company’s normalized, on-going financial performance and the potential consequences of strategic decisions.
As a result:
The completed QoE analysis delivered:
The client gained meaningful financial clarity that positioned the company more effectively for future strategic decisions.
The Lauber Difference
This engagement demonstrated the value of an experienced, external, collaborative financial analysis. By listening closely to leadership, working alongside internal finance staff, and digging into operational realities, Lauber delivered insights that helped guide both strategic decision-making and valuation discussions.
The client, a cargo service provider, engaged a Lauber Business Partner to perform a Quality of Earnings (QoE) analysis as the company prepared to work with its investment banking partner as it considered a potential strategic transaction.
However, the company faced a significant challenge. Over several years, the business had struggled to produce consistently reliable monthly financial statements. Key adjustments were often made at year-end, making it difficult for leadership—and potential buyers—to clearly understand the company’s true monthly profitability and operational performance. In addition, the historical financials likely needed to be adjusted for non-recurring costs and owner-related expenses that would not recur under a different owner.
Without a clearer financial picture, it would be challenging to properly evaluate the company’s enterprise value and profitability trends.
Lauber’s Approach
Lauber began by developing a deep understanding of the company’s:
- Accounting policies and financial processes
- Operational cost structure
- Business segments and customer profitability
Working closely with the company’s Controller, the Lauber Business Partner:
- Evaluated how operational expenses were recorded and timed
- Identified alternative accounting approaches to better match expenses with the periods in which they occurred
- Analyzed performance across business segments, regions, and key customers
- Identified non-recurring costs
- Developed a clearer view of profitability trends and drivers
During the process, the owner began seriously considering shutting down a major segment of the business. Lauber helped the leadership team evaluate this potential decision by modeling the financial impact of discontinuing those operations.
By working collaboratively with the Controller, Lauber developed financial analyses showing how the changes would affect:
- Overall profitability
- Regional performance
- Customer-level results
Results
The analysis provided leadership with a clearer understanding of the company’s normalized, on-going financial performance and the potential consequences of strategic decisions.
As a result:
- The owner chose not to discontinue the business segment
- Leadership shifted focus toward improving customer profitability within that region
- The company gained a more accurate view of its true recurring earnings and operational trends
The completed QoE analysis delivered:
- Normalized profitability reflecting adjusted ownership-related costs
- Clearer insight into performance by customer and region
- Greater transparency for potential acquirers and financial partners
- Improved visibility into the company’s enterprise value
The client gained meaningful financial clarity that positioned the company more effectively for future strategic decisions.
The Lauber Difference
This engagement demonstrated the value of an experienced, external, collaborative financial analysis. By listening closely to leadership, working alongside internal finance staff, and digging into operational realities, Lauber delivered insights that helped guide both strategic decision-making and valuation discussions.
