Case Study 04 · Private Equity / M&A Due Diligence · Bay Area, CA
Inheriting the Toxic Asset: $1M Holdback.
Days from closing, a PE firm was about to assume $5M in concealed deferred maintenance. A forensic infrastructure audit changed the terms of the deal.
The Illusion
A middle-market Private Equity firm was executing a buyout of a regional logistics company. The crown jewel of the acquisition was a 200,000 sq. ft. cold storage facility. The standard Property Condition Assessment (PCA) noted that the facility was older but visually maintained, with a fresh coat of epoxy on the warehouse floor as supporting evidence. Days from closing, the Operating Partner had no reason to believe the infrastructure was anything but stable.
The Ground Truth
Base Layer FM deployed our Quality of Infrastructure (QoI) audit, bypassing the cosmetic surface and forensically examining the heavy mechanical systems. We uncovered critically obsolete ammonia piping, failing sub-floor insulation threatening catastrophic freezer heaving, and severe EPA wastewater runoff compliance violations that prior ownership had obscured in the data room.
The Execution
The PE firm's Operating Partner was days from closing and unknowingly assuming $5M in hidden deferred maintenance. We delivered the QoI Board Report and halted the standard closing process. The CapEx Exposure Matrix gave the M&A attorneys the precise financial evidence needed to renegotiate before the ink dried.
The data room isn't the building.
A standard PCA validates what's visible. A forensic Quality of Infrastructure audit validates what you're actually buying — before the liability transfers to your balance sheet.