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RAS Management was engaged by a private equity group to conduct pre-acquisition due diligence related to a proposed investment in a group of individual road construction / service providers in several States.  The individual operations were subsidiaries of a National provider of road construction / services and each was operated as a stand-alone business.  Each business unit negotiated contracts directly with State agencies and / or private contractors within their discreet operating territory, and there was little consistency in business practices or oversight processes.  

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The private equity group considering the investment asked RAS to develop diligence processes that were consistent for each of the operating units in order to assess the various contract negotiation processes, the financial viability of existing contracts, inventory values (equipment and otherwise) for each unit, staffing practices, and strength of management.  RAS was also asked to assess opportunities to establish central administrative services in order to harmonize business practices and to make recommendations on staffing and management issues.

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RAS provided the private equity group with substantial input that was used in negotiating purchase price and other deal terms, and the RAS recommendations on centralizing services and management considerations formed a guide that the private equity group implemented post acquisition. At least partly as a result of the matters identified by RAS, post-acquisition profitability increased substantially and the private equity group was able to use the diligence guidelines developed by RAS in their evaluation of subsequent “add on” acquisition activities.