The Challenge
The founder of a $6M creative media company — a content platform with licensing revenue, digital products, and brand partnerships — received acquisition interest from a strategic buyer. The problem: their financials weren’t remotely ready for due diligence.
Revenue was tracked in spreadsheets. Costs weren’t allocated by business unit. There was no clean separation between the founder’s personal expenses and company operations. And the company had never produced a proper set of GAAP-compliant financial statements.
“The buyer wanted auditable financials and a three-year projection model. I had a QuickBooks file and a prayer,” the founder said.
What We Did
Phase 1: Financial Cleanup (Weeks 1-6)
We performed a thorough accounting cleanup going back 18 months:
- Reclassified personal expenses and established clean entity separation
- Restructured chart of accounts for GAAP compliance
- Implemented proper revenue recognition for multi-period licensing deals
- Reconciled all bank and credit card accounts with supporting documentation
- Produced clean P&L, balance sheet, and cash flow statements for 3 fiscal years
Phase 2: Valuation & Financial Model (Weeks 4-8)
Simultaneously, we built a comprehensive financial model to support the valuation conversation:
- Three-statement model with 5-year projections
- Revenue build by business unit (licensing, digital products, partnerships)
- DCF valuation with sensitivity analysis on key assumptions
- Comparable company analysis using public and private transaction multiples
- Synergy analysis showing value creation for the acquirer
Phase 3: Due Diligence Support (Weeks 8-16)
When the buyer’s diligence team arrived, we were ready. We managed the entire financial due diligence process:
- Organized virtual data room with all financial documentation
- Responded to 200+ diligence questions within agreed timelines
- Provided management presentations with clear financial narratives
- Supported purchase price negotiations with data-driven analysis
The Results
- Timeline: Deal closed in 5 months from initial engagement — the buyer’s counsel noted the financial documentation was “unusually well-organized for a company this size”
- Valuation: Achieved a purchase price 15% above the buyer’s initial indication, supported by the financial model and clean GAAP statements
- Diligence: Zero material findings or restatements required
- Founder outcome: Clean exit with favorable earnout structure and retained creative role
“DMW turned what could have been a 12-month nightmare into a smooth 5-month process. The buyer’s team kept commenting on how buttoned-up our financials were. That credibility translated directly into a better deal.” — Founder
Key Takeaway
The best time to prepare for an exit is 12-18 months before you need to. Clean financials, proper revenue recognition, and a defensible financial model don’t just help you close a deal — they help you close a better deal. Every dollar invested in financial preparation typically returns 5-10x in valuation.
Thinking about an exit or acquisition? Book a free consultation →