As we have been performing Quality of Earnings and diligence engagements over the last year, we are seeing interesting earnings trends (either potentially artificially inflated or deflated) across industries. Interested to see how searchers are accounting for potential short term trends in their valuations.
One common issue we are also seeing in diligence is the seller offsetting PPP loans and other credits against their ordinary payroll effectively artificially reducing compensation expense and overstating earnings. Please be on the look out!
We are always available to discuss any unusual items you are seeing in the financials or to discuss the appropriateness of any management add-backs. Feel free to reach out!