LCS Forensic Accounting & Advisory

Robust financial and tax due diligence analysis on both buy and sell sides of mergers and acquisitions (M&A) is crucial for buyers and sellers to understand the economic reality of acquisition targets. Uncovering the accurate financial health and earnings potential of a target can be challenging for those involved in lower middle market M&A. Accounting tends to be messy in this space due to inexperienced accounting staff and a lack of GAAP (Generally Accepted Accounting Principles) accounting.

LCS Forensic Accounting & Advisory (LCS), a certified public accounting firm, is carving a niche with a specialized focus on forensic accounting and financial due diligence for the underserved lower middle market comprising enterprises with market valuations ranging from $5 to $100 million.

It serves as a trusted advisor specializing in buy-side and sell-side mergers and acquisitions, financial and tax due diligence, transition accounting services, business valuation, and forensic accounting expert witness services.

“We assess a company’s actual earnings and whether those earnings may be representative of its potential future earnings. Our aim is to uncover the business’s economic reality,” says Max Lummis, founder and managing shareholder of LCS Forensic & Accounting Advisory.

At the heart of its service is the quality of earnings analysis, a fundamental process designed to uncover the true financial health of a business emphasizing earnings before interest, taxes, depreciation, and amortization (EBITDA). This comprehensive analysis includes an evaluation of the company’s financial well-being, working capital requirements, and the quality of revenue generated, along with the effectiveness of the company’s accounting personnel and procedures.

On the buy side, the firm offers holistic financial assessment involving the meticulous review and adjustment of financial data to conform to generally accepted accounting principles. While on the sell side, the same rigorous evaluation is applied to provide an accurate representation of the company’s earnings over a three- or four-year horizon.

These assessments and evaluations enable early identification and rectification of financial irregularities within the company’s accounting records, especially prior to entering the market for a potential sale.

The firm’s offerings extend beyond financial due diligence, encompassing fractional CFO services, litigation support services, expert witness services, business valuation services, and tax diligence. This comprehensive suite of services aligns with clients’ needs and objectives, enabling the early detection of red flags to save time and resources.

LCS’s cohesive team of experts stands as the backbone of its rigorous quality of earnings and financial due diligence analysis. Their impressive track record spans over a decade, providing a depth of familiarity and consistency upon which clients can rely. Comprising CPAs, valuation analysts, and fraud examiners, all armed with forensic accounting backgrounds, the team focuses on the nuances of the lower middle market.

Drawing on extensive experience in navigating complex financial landscapes, the team provides a realistic assessment of a company’s multi-year earnings while identifying and rectifying financial irregularities. On the sell side, this process aligns seller expectations with potential buyer perceptions and facilitates smoother transactions by resolving accounting discrepancies.

In every transaction, LCS emphasizes acquiring detailed relevant information. The proactive approach involves a comprehensive grasp of the deal’s type, whether it’s a stock or asset transaction. It also conducts a detailed analysis of the current accounting system and identifies any necessary system modifications. This meticulous information-gathering endeavor serves the dual purpose of precise fee estimation and early red flag detection, ensuring alignment between the team and its clients.

LCS Forensic & Accounting Advisory’s journey through the complexities of financial scrutiny underscores the importance of precision, tailored solutions, and deep expertise. In an industry that thrives on accuracy, its commitment to service excellence and its adept team make them the ideal partner for those navigating the complex world of financial and tax due diligence.