February 27, 2023

Our Review of 2022

Inflation, Interest Rates, Fraud, Investing & More Our business was back on pace during 2022. How about yours? Here are a few highlights of our activity during the year. While fraud and litigation are inelastic to the economy in our experience, we anticipate the demand for both sell-side and buy-side Quality of Earnings analyses are indicative of more middle market M&A in 2023.

Litigation Support & Fraud Investigations

Employee Embezzlement  Manufacturing company sued its bookkeeper for embezzling approximately $600,000 B&A conducted a forensic investigation and provided expert witness testimony for Plaintiff Case settled in favor of client  Diversion of Funds PE sponsor of technology-enabled healthcare company suspected mismanagement B&A investigated and found diversion of funds and mismanagement by the CEO PE sponsor negotiated improve ownership position in company

Bankruptcy Disgorgement  Bankruptcy trustee sued financial institution for disgorgement of approximately $1.7MM in credit card payments As expert witness for Defendant, B&A established the payer was solvent when most of the payments were made Case settled in favor of client Developer Embezzlement  Investor in an EB5 development sued the developer for diverting approximately $500,000. B&A conducted a forensic investigation, provided a report and is serving as expert witness for Plaintiff Trial scheduled for 2023

SEC Receiverships

Quasi-Ponzi Schemes  The SEC appointed B&A Receiver of 2 different matters involving investment advisors who operated quasi-Ponzi schemes Both SEC Receiverships are ongoing $230MM CFTC Receivership B&A is the forensic accountant for the Receiver of a company that sold gold and silver to about 1,600 investors for 3x market prices We reviewed 51 operating bank accounts and forensically compiled all sources and dispositions of cash

Financial Advisory

$550 Global Fashion Brand  Fashion brand with with e-commerce platform and brick-and-mortar stores B&A delivered a QofE assessment for financing. $80MM E-Commerce Retailer  B-to-C and B-to-B adult toy distributor selling to end users, retailers, distributors, wholesalers and Amazon B&A conducted a sell-side QofE for the company’s shareholders as preparation for sale

Food Service Provider B-Corporation providing healthy meals to schools and senior citizens. B&A conducted a buy-side QofE of a competitor in bankruptcy. Client had issued an LOI to buy substantially all the target’s assets in accordance with Section 363 of the Bankruptcy Code. Family Office Roll Up Family office rolling up precision machining businesses needed QofE assessments for 2 targets and an existing portfolio company for debt financing After B&A discovered errors made by the outside CPA, our engagement was expanded to review the CPA’s work and year-end adjustment.

Workout & Restructuring

Food Processor Company with 85% customer concentration with Costco lost control of its costing due to supply chain challenges during the Pandemic. After falling behind on its A/P, Costco retracted a portion of its business B&A fixed the company’s costing and prepared projections for management to present to its lender for new financing. Company secured $5MM from its secured lender, $5MM from a mezzanine lender and $6.5MM from a shareholder to bring A/P into compliance.

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How Can We Help You?

Brandlin & Associates is an exclusive provider of financial workouts and restructurings, forensic accounting, financial due diligence and litigation support for senior lenders, mezzanine funds, private equity groups, attorneys and middle market companies.  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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