Financial Due Diligence Sevice
We provide Financial due diligence which means do audits a company's financial statements and books to make sure that there are no irregularities and that the company is on solid financial footing.
Whether you are a buyer, lender, or seller, financial due diligence is essential before an investment, sale or merger can be completed. We provide due diligence and other services to support your decision-making process across a wide range of transactions, with an integrated service approach to our clients.
Our experienced teams conduct a detailed investigation of information at the target company to identify issues that can affect the transaction.
We focus not only on the opportunities and the strengths shown by the target company, but rather our aim is to identify risks and to place our clients in a stronger position during negotiations.
We make our clients become aware of any financial issues that will be seen as problematic by investors and can take timely action to eliminate or mitigate such issues.
Our teams work very closely in cooperation with our industry specialists. We also frequently make use of our global strength, using specialists from our offices around the world, especially on international assignments.
Our financial due diligence checklist covers everything you need to get ready or review (depending on whether you're sell or buy-side) during an M&A deal.
Below is a basic outline of the financial due diligence checklist:
- Income statements (past five years) showing income and expenditure, profit and loss
- Balance sheets (past five years) showing company assets and liabilities
- Cash flow statements (past five years) showing all cash inflows and cash outflows
- Management discussions around financials, including meeting minutes and emails
- Operating margin, reflecting the percentage of profit the company produces from its operations before subtracting taxes and interest charges
- Gross margin (amount of money left after subtracting all direct costs of producing or purchasing company goods or services)
- Profit margin, i.e. net income divided by net sales or revenue
- Interest coverage (earnings before interest and taxes divided by interest expense)
- Debt to equity ratio, showing how much debt there is compared to assets
- Asset turnover, showing how many sales were generated from every dollar of company assets
- Return on assets, showing level of efficiency in earning profit from company resources
- Return on equity, i.e. net income divided by shareholder equity
- Tax due diligence, looks at the company's tax exposure, whether it may owe any back taxes, and where it can reduce its tax burden going forward.