As buyers become more skilled with advanced analytics, their pushback against seller adjustments in quality of earnings report is getting more rigorous. Buyers routinely exclude seller adjustments, but with adjustments proliferating the stakes are higher. Buyers should dig into the proposed adjustments and examine the methodology used to derive them as part of the overall diligence effort.
A new KPMG report, Savvy shoppers: How buyers find value in adjustments, explores in detail the impact of these seller-proposed EBITDA adjustments from the buyer’s perspective. We look at the nature and magnitude of the adjustments that buyers most often challenge and identify where buyers frequently discover sources of value and identify their own adjustments.