Transaction Forensics

The Transaction Forensics team assists organizations and legal counsel in identifying and mitigating financial, operational and reputational risks inherent to mergers and acquisition transactions.

What EY can do for you

Throughout the M&A lifecycle, EY teams help organizations and their advisors navigate the risk and opportunities inherent to M&A transactions. Pre-transaction, EY teams deliver value by analyzing key financial transaction drivers in sales and purchase agreements (SPAs), while mitigating potential reputation and regulatory challenges from prior business conduct. Post-transaction, EY teams help companies with identifying, mitigating and resolving disputed financial items, providing a stable ongoing compliance environment.

Pre-transaction services

Successful transactions depend on well-prepared sellers and diligent buyers. Before closing any deal, both parties need to analyze a range of risks to reduce potential loss of deal value. These risks may include fraud, bribery, corruption, trade and export restrictions, conﬂicts of interest, third-party integrity, reputation, and regulatory investigations. Whichever side of a transaction we support you on, EY professionals help you mitigate these risks during drafting and before signing to help protect and provide transaction value.

Conduct integrity forensic due diligence, including background analysis on key executives and counterparties.

Assess the risks that may cause significant reputational or financial damage (fraud, bribery and corruption, money laundering, economic sanctions, and conflict of interest).

Strategize recurring vs. nonrecurring risk reduction, including existing compliance program assessment and integration.

Conduct government contract forensic due diligence (e.g., exposure to risks of bribery in contracting).

Perform fact-finding and transaction testing.
Focus the outcome of commercial negotiations by working with you and your advisors to incorporate specific provisions within the SPA.

Advise on the merits of different purchase price mechanisms (e.g., locked box vs. completion accounts).

Support pre-signing negotiations (e.g., treatment of debt, cash and working capital, appropriate earn-out target, permitted leakage).
Perform completion account trial runs (e.g., net working capital, earn-out).

Assist with the estimation process of closing net debt and working capital for determining initial consideration payable at completion.

Post-transaction services

Experienced market participants know that completing the deal is less than half the challenge. Uncertainties related to valuations, working capital adjustments and earn-outs, along with increased investments in emerging markets, expose transacting parties to signiﬁcant risks even after the deal is completed. Successfully closing, navigating financial and operational integration, and driving expected synergies all present opportunities and risks. EY teams help you identify, address, and mitigate post-deal financial and compliance challenges to bring successful deals to fruition.

Assist with the development of anti-fraud, anti-bribery and anti-corruption compliance programs.

Conduct post-closing risk assessments; advise on compliance risk programs and perform compliance monitoring.

Leverage data analytics to perform enhanced due diligence with additional data from the acquired business post-closing.

Conduct fraud investigations.
Assess the buyer’s application of the accounting principles required in the SPA

Identify differences between the estimated statement, accounts subject to pre-signing diligence and the preliminary draft closing statement (if applicable).

Advise on the application of contractual terms and calculations defined in the SPA
Objective analysis of accounting positions presented by both parties, including the SPA requirements and relevant GAAP guidance as applicable for each item in dispute.

Act as a neutral expert to provide a balanced analysis of the evidence and testimony presented by the buyer and seller to facilitate resolution of disagreements over post-closing adjustments.
Conduct assessments of each party’s position regarding the transaction, assisting parties in understanding the expectations set forth in the SPA.

Work on behalf of either buyer or seller, to perform detailed analysis of the accounting positions taken by both parties under the SPA, identifying any discrepancies or areas of contention that may arise during purchase price settlement.

Serve as experts to support either the buyer or seller to resolve disputes related to the closing statement or any other contingent payments.

Representation and warranty claims

Representations and warranties insurance (RWI) has become a key component in corporate transactions, offering a strategic approach to managing the risk of breaches in representations and warranties outlined in transaction agreements. This insurance helps mitigate post-closing exposure for both buyers and sellers, contributing to smoother deal execution in today’s complex and competitive environment. EY teams assist private equity firms and corporate development departments, often in conjunction with their legal counsel, to assess initial issues, develop claim submissions and support and work collaboratively with the insurance carriers through resolution of the claim.

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EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

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