Transaction Advisory for a Cross-Border Acquisition: From Due Diligence to a $100M Raise at Unicorn Valuation

Ayelet Krom
Apr 20
5 min read

Updated: 1 day ago

Raftel provided transaction advisory services for an Israeli defense technology company acquiring a US-based target to accelerate its American operations. The deal was not a standard cash-free, debt-free acquisition. The buyer had already been funding the target's operations prior to close, which introduced complexity around indebtedness, equity value adjustments, and working capital true-ups. Raftel led the financial due diligence process in three weeks, supported the deal through close, and built the pro forma financial models that became the foundation for a $100M equity raise at a billion-dollar valuation by the end of that summer.

The Company: Israeli Defense Tech With US Expansion Goals

The client was a fast-growing Israeli defense technology company with multiple legal entities across Israel and the US. While they already had a US presence, leadership determined that organic expansion would be too slow to support their customers, growth trajectory, and long-term strategy.

They identified a US-based acquisition target that fit strategically. But by the time formal acquisition discussions began, the relationship between the two companies had already become financially complex.

Why This Was Not a Standard Acquisition

Before the deal officially started, the buyer had already been funding much of the target's operations. Loans had been extended. Operating expenses were being supported directly by the acquiring company.

That meant this could not be structured as a typical cash-free, debt-free transaction. The prior funding created layers of indebtedness that would directly affect the final equity value. If those amounts weren't tracked, validated, and properly reflected in the transaction mechanics, the buyer risked overpaying or inheriting unresolved liabilities.

Leadership needed three things:

A clear picture of what they were actually buying, not what the target's financials appeared to show on the surface
A defensible structure for how prior funding would flow through to final equity value
A post-acquisition financial model strong enough to support an upcoming capital raise

They engaged Raftel to provide hands-on support across due diligence, deal structuring, and post-close financial modeling.

Financial Due Diligence: Completed in Three Weeks

Raftel led the financial due diligence process with a focus on quality of earnings and validating the financial reality behind the target's operations.

Because the deal carried pre-existing indebtedness from the buyer's prior funding, due diligence required more than reviewing historical financials. We analyzed outstanding loans, tracked historical funding flows between the two companies, and mapped how those amounts needed to be reflected in the purchase price mechanics.

The diligence process also covered working capital analysis and identification of adjustments required to reach an accurate final equity value. Every finding was documented with a clear recommendation on how it should affect deal terms.

Due diligence was completed in three weeks. Fast enough to maintain deal momentum without sacrificing thoroughness.

Deal Support Through Close

Following diligence, Raftel continued to support the transaction through the three-month period leading to close. This included:

Validating the adjustments required to bridge from enterprise value to final equity value
Ensuring outstanding indebtedness from pre-close funding was properly reflected in the transaction structure
Supporting working capital and debt-related true-ups at close
Coordinating with legal and tax advisors on cross-border structuring between the US and Israeli entities

The goal was to ensure the buyer closed on terms that accurately reflected the economic reality of the deal, not the version that existed before diligence started.

Pro Forma Financial Models for the Combined Entity

In parallel with the transaction, Raftel built pro forma financial statements and forecasts for the combined US and Israel operations.

These models served two purposes. First, they gave leadership a clear view of what the combined company would look like post-acquisition: revenue, cost structure, headcount, and cash flow across both jurisdictions. Second, they created a defensible financial narrative for investors.

This wasn't a back-of-the-napkin projection. The models needed to hold up under investor scrutiny, support a specific valuation thesis, and account for cross-border operational complexity. They were built to be the financial backbone of the company's next raise.

The Result: $100M Raise at a Billion-Dollar Valuation

By the end of the summer, the company announced an equity raise of $100 million at a billion-dollar valuation, officially reaching unicorn status.

The pro forma models and financial narrative Raftel built became the foundation for that raise. Investors saw a combined entity with a clear financial story, validated acquisition economics, and a credible forward-looking model across both the US and Israeli operations.

The timeline tells the story:

Weeks 1–3: Financial due diligence completed
Months 1–3: Transaction support through close, pro forma modeling in parallel
By end of summer: $100M equity raise announced at unicorn valuation

Following the transaction and raise, the company re-engaged Raftel to continue supporting its finance function, extending the relationship beyond the deal itself.

For this client, transaction advisory wasn't just about getting to close. It was about ensuring the deal strengthened the business, supported fundraising, and created a scalable financial foundation across Israel and the US.

Frequently Asked Questions

What is transaction advisory for startups? Transaction advisory is specialized financial support during a merger, acquisition, or significant capital event. For startups and growth-stage companies, this typically includes financial due diligence, quality of earnings analysis, deal structuring, working capital analysis, and building pro forma models for the combined entity. Unlike investment banking, transaction advisory focuses on the financial accuracy and operational integrity of the deal rather than sourcing or negotiating it.

How long does financial due diligence take? The timeline depends on deal complexity, but a focused financial due diligence process can be completed in as little as three weeks for a mid-market transaction. Key factors include the quality of the target's financial records, the complexity of the deal structure, and whether there are unusual items like pre-existing indebtedness between the buyer and target.

What is a quality of earnings analysis? A quality of earnings (QoE) analysis validates that a company's reported earnings accurately reflect its ongoing economic performance. It adjusts for one-time items, related-party transactions, accounting irregularities, and other factors that could distort the true profitability of the business. QoE is a standard component of financial due diligence in any acquisition.

Why do companies need pro forma financial models after an acquisition? Pro forma models show what the combined entity looks like financially after the deal closes: projected revenue, expenses, headcount, and cash flow. They're essential for internal planning, board reporting, and fundraising. In this case, the pro forma models Raftel built became the foundation for a $100M equity raise because they gave investors a clear, defensible picture of the combined company's financial trajectory.

Evaluating an acquisition or preparing for a raise? We build the financial models and run the diligence that investors and boards actually trust. Reach out with the details and we'll tell you where we can help.