Financial Due Diligence

Our Financial Due Diligence Services Include:

1. Financial Health Assessment

• Review of Financial Statements: We conduct a detailed review of the target company’s financial statements, including the balance sheet, profit and loss account, and cash flow statements, to ensure accuracy and consistency.

• Profitability & Liquidity Analysis: We analyze the profitability ratios, liquidity position, and financial performance of the target company to assess its ability to generate sustainable earnings and manage short-term obligations.

• Working Capital Analysis: We examine the working capital structure to evaluate the company’s operational efficiency, liquidity, and its capacity to meet day-to-day expenses.

2. Quality of Earnings Review

• Adjustments to Reported Earnings: We identify any non-recurring items, accounting adjustments, or one-off transactions that might distort the true earnings potential of the business.

• Revenue Recognition Analysis: We assess the company’s revenue recognition practices to ensure compliance with accounting standards and identify any potential concerns related to timing or reporting of revenue.

• Cash Flow Sustainability: We evaluate the cash flow generation ability of the business, focusing on the sustainability of operating cash flow and its capacity to support debt, growth, and capital expenditures.

3. Debt & Liabilities Analysis

• Debt Structure & Covenants: We review the company’s outstanding debt, including the terms, repayment schedules, and any restrictive covenants that might affect the business’s financial flexibility.

• Off-Balance-Sheet Liabilities: We examine contingent liabilities, lease obligations, or any off-balance-sheet items that could impact the overall financial position of the business.

• Liability Risks: We identify any potential legal, tax, or environmental liabilities that could affect the company’s future financial performance or result in unforeseen costs.

4. Tax & Regulatory Compliance Review

• Tax Position & Contingencies: We evaluate the target company’s tax compliance, including tax filings, outstanding tax obligations, and any potential tax risks or audits that could arise post-transaction.

• Tax Losses & Credits: We assess the availability of tax attributes such as carry-forward losses, credits, and deductions that could affect the company’s future tax liabilities.

• Regulatory Compliance: We review the company’s compliance with local and international regulations, ensuring that there are no outstanding legal issues or regulatory breaches that could impact the transaction.

5. Operational & Market Analysis

• Operational Efficiency: We assess the operational processes and efficiency of the target company to identify potential cost-saving opportunities, performance improvement areas, and areas of operational risk.

• Market & Industry Position: We evaluate the company’s competitive position, market share, and growth potential in the industry. This includes analyzing industry trends, competitive landscape, and potential risks.

• Customer & Supplier Contracts: We review key customer and supplier contracts to evaluate the business’s revenue stability, dependency on key customers, and the risk associated with major contracts or relationships.

6. Financial Projections & Forecasts

• Forecast Analysis: We evaluate the company’s financial projections, including revenue, expenses, and cash flow forecasts, to determine their reasonableness and alignment with historical performance.

• Sensitivity & Stress Testing: We conduct sensitivity and stress testing of the company’s financial forecasts to assess the potential impact of various economic or operational scenarios on future performance.

• Valuation Impact: We assess the financial forecasts in the context of business valuation to understand how they could affect the overall valuation and pricing of the target company.

7. Integration Planning Support

• Post-Transaction Integration: We support the development of a financial integration plan post-transaction, focusing on harmonizing financial processes, systems, and reporting frameworks.

• Synergies Identification: We help identify potential cost synergies and operational efficiencies that can be realized post-acquisition, enhancing the value of the transaction.

• Risk Mitigation: We provide guidance on managing risks that could arise during the integration phase, including financial, operational, and regulatory risks.

8. Vendor & Third-Party Review

• Third-Party Verification: We verify the financial position and status of third-party vendors or entities that the target company relies on, ensuring there are no hidden risks associated with such relationships.

• Vendor Contracts Evaluation: We assess any significant vendor contracts and dependencies that could affect the target company’s financial stability post-transaction.

9. Transaction Structure & Pricing Advisory

• Purchase Price Allocation: We assist in determining the appropriate purchase price allocation and offer insights into how different assets and liabilities should be accounted for in the transaction.

• Deal Structure Analysis: We help evaluate the optimal deal structure, considering the tax and financial implications of asset purchases, stock purchases, or mergers.

• Negotiation Support: Our team provides support during negotiations, helping you understand the financial dynamics and ensuring that the deal structure aligns with your financial objectives.