Transaction Advisory Services
Financial Due Diligence
Tax Due Diligence
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Valuation
Deal Structuring
Business Restructuring
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Financial Due Diligence
Financial due diligence is a comprehensive examination of a company’s financial health and performance. It’s typically conducted before a significant transaction, such as a merger, acquisition, or investment. The primary goal is to uncover potential financial risks or discrepancies impacting the deal’s value or terms.
Key Areas of focus in Financial Due Diligence are:
Financial Statements Analysis
- Scrutinising profit and loss statements, balance sheets, and cash flow statements for consistency and accuracy.
- Identifying trends, anomalies, and potential red flags.
- Analysing financial ratios to assess profitability, liquidity, solvency, and efficiency.
Revenue and Expense Analysis
- Evaluating the revenue recognition policy and its impact on financial performance.
- Assessing the reasonableness of revenue growth and expense trends.
- Identifying any potential revenue or expense manipulation.
Working Capital
- Analysing inventory levels, accounts receivable, and accounts payable.
- Assessing the company’s ability to manage cash flow effectively.
- Identifying potential working capital issues.
Debt Analysis
- Evaluating the company’s debt structure, including interest rates, maturity dates, and covenants.
- Assessing the company’s ability to service its debt.
- Identifying any potential refinancing risks.
Fraud and Error Detection
- Implementing procedures to detect potential fraud or errors in financial reporting.
- Investigating any unusual transactions or discrepancies.
Contingent Liabilities
- Identifying potential liabilities that are not reflected in the financial statements.
- Assessing the likelihood and potential impact of these liabilities.