CLIENT: B2B Wholesale Distribution

A B2B distributor selling to major retailers in the U.S. engaged Sapling to perform a sell-side Quality of Earnings review to support the planned sale of the business. The engagement focused on reconstructing and validating historical financial performance using transaction-level data, bank activity, inventory records, and supporting operational information.

Key Insights

We used the company’s accounting system to track cash receipts and disbursements, while revenue data was obtained through an external software program. We also collected and reviewed monthly bank statements, year-end inventory count reports, and fixed asset listings provided by management.

We constructed the income statement using monthly revenue and expense data derived from invoice-level records. For the balance sheet, we developed individual continuity schedules for key accounts using bank statements, AR collections data, inventory purchases, and depreciation assumptions.

We prepared a cash proof to reconcile net income from the income statement to the net change reflected in the consolidated bank statements. We reconciled sales and expenses to cash deposits and disbursements, respectively. This cash proof was used to validate the accuracy of the monthly financial statements and assess how closely cumulative EBITDA aligned with operating cash flows.

EBITDA Adjustment
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