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At Kratos Capital, a Dallas-based M&A advisory firm, we believe “quality over quantity” is more than a phrase; it's the foundation of how we approach every transaction. With over 200 completed deals across industries such as manufacturing, healthcare, technology, energy, distribution, and professional services, we know that a successful merger or acquisition starts with a strong due diligence process.
Due diligence is where the facts meet the deal sheet. It's the stage where your assumptions about the target company, its financial health, operational strength, and market position are either confirmed or challenged. With a century of combined experience guiding liquidity events, our senior investment bankers ensure this process is handled with the depth and efficiency it deserves.
In mergers and acquisitions, the stakes are high. Due diligence is about more than checking boxes—it's about:
Identifying Risks Before Closing: Finding undisclosed liabilities, outdated contracts, or operational weaknesses before they become your problem.
Validating Value: Making sure the numbers align with the asking price, whether you are acquiring a $15 million regional manufacturer or a rapidly scaling SaaS provider.
Informing Strategy: Gaining insight into culture, processes, and infrastructure so you can integrate effectively on day one.
1. Financial Review: We examine audited and unaudited financial statements, tax returns, and cash flow reports. In one recent engagement with a multi-location HVAC services company, our deep dive into seasonal revenue patterns and deferred maintenance costs allowed the buyer to negotiate a purchase price adjustment that better reflected long-term profitability.
2. Contracts and Obligations: From vendor agreements and customer contracts to property leases and licensing arrangements, every signed document tells part of the story. For example, while advising on the sale of a regional food manufacturing business, our team identified a supplier contract with locked-in pricing that created a significant competitive advantage for the buyer.
3. Operational and Workforce Assessment: Beyond the numbers, we evaluate how the company functions—its staffing structure, supply chain, IT systems, and quality control processes. When advising on the acquisition of an industrial distribution company, we flagged a heavy reliance on a single overseas supplier, prompting the buyer to negotiate contingency sourcing plans before closing.
4. Tax and Insurance Compliance: We verify that all taxes are up to date and that insurance coverage is adequate for the company’s size and risk profile. In one transaction involving a commercial roofing contractor, uncovering underinsured high-risk projects led to strategic adjustments in deal structure to protect the buyer.
If you were acquiring a Texas-based medical equipment distributor, a thorough due diligence review might reveal aging inventory and a lack of documented maintenance schedules. Discovering these issues could give you the leverage to negotiate more favorable terms, including additional working capital at close to modernize the product line.
On the other hand, if you were selling a regional IT services provider, due diligence might highlight strong recurring revenue contracts and low customer churn. These factors could increase buyer confidence and help justify a premium valuation.
Our approach to due diligence is rooted in the same principle that drives all of our work: efficient execution that delivers superior results. We coordinate with your legal and accounting teams, manage the flow of information, and keep the process moving without sacrificing thoroughness. This allows our clients—whether private business owners, corporate executives, or investment groups—to focus on strategy and negotiation, not administrative bottlenecks.
The due diligence phase can be the turning point in any transaction. Whether you are acquiring a growing e-commerce brand, selling a third-generation manufacturing business, or raising private capital to fund expansion, having a disciplined, experienced advisory team makes all the difference.
Kratos Capital brings proven transactional leadership, deep industry experience, and a commitment to quality outcomes to every engagement. Contact us today to discuss your goals and learn how we can help you move from opportunity to a closed, successful deal.
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