We are honored that KPP considers Brandlin & Associates part of its due diligence team. Over the course of numerous engagements, including the recently closed Imperial Bag & Paper Co. LLC, we have helped KPP determine when to work toward a solution to a potential “deal killer” and when to walk away. Examples of Brandlin’s discoveries include:

• In a cross-border business combination, Brandlin identified and substantiated revenue and expenses from the European company that would follow the go- forward operations. These findings were significantly different than the selling company had initially represented and resulted in an adjustment to the purchase price.
• Brandlin identified numerous EBITDA adjustments while preparing GAAP financial statements for a $100 million wholesale distributor, including: increased vendor rebates; overstated inventory; and, unrecorded customer rebate liabilities.
• Consolidated three affiliated companies that were being sold off of separate financial statements and systems, allowing KPP to manage them as one company at closing.

Companies that appeared attractive but did not pass KPP’s due diligence process have included public companies with audited financial statements. Some of these deals were completed by other capital sources that ended up with significant losses. Examples of Brandlin’s discoveries that contributed to KPP’s decision to pass on deals include:

• Retail level cash receipts of a manufacturer/retailer were not adequately controlled, allowing for the misappropriation of cash.
• IT systems were transparent and insecure allowing outside hackers to access company data and allowing employees to access financial and other sensitive records.
• Previously non-disclosed inactive shareholders of a company actually controlled 48% of the outstanding stock, resulting in a more complicated equity structure.
• Inventory levels increased 49% year-over-year including a substantial amount of slow moving and obsolete inventory, which negatively impacted EBITDA.

Key Principal Partners (KPP) is a nationally recognized private investment firm providing capital to middle market companies throughout North America. KPP utilizes mezzanine and equity capital to fund the growth, buyout, refinancing or acquisition of profitable companies. KPP's flexible approach to structuring investments does not require control of companies. KPP has over $1 billion in capital under management and can invest $7 million to $40 million in companies with at least $20 million in revenue. Headquartered in Cleveland, KPP also has offices in Greenwich and San Francisco.

Brandlin & Associates is an exclusive provider of investigative accounting, financial consulting and strategic consulting services. We pride ourselves on offering superior technical expertise, years of practical experience and unparalleled service to decipher financial and operational performance metrics. As a result, our clients are able to make informed decisions in a timely manner.

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