Independent analysis of earnings, working capital, cash flow, debt, financial risks and key transaction drivers to help buyers, investors and sellers make better-informed decisions.
Quick answer
Financial due diligence is a transaction-focused investigation of a target's financial position and performance: quality of earnings, revenue and margin analysis, working capital, net debt, cash flow, forecast assumptions, tax and compliance exposures and deal-relevant risks. It is not a statutory audit — it provides no audit opinion and is not designed to detect all misstatement; it is scoped to the buyer's or seller's decision and reported as findings, adjustments and risks.
Overview
Financial due diligence is not an audit. It does not provide an opinion on the financial statements. It examines the specific drivers that determine what you are paying for: sustainable earnings, the working capital the business genuinely needs, the debt and debt-like obligations that reduce the price, and the cash the business converts from its profit.
Every adjustment we propose is explained and traceable to the underlying records, so it can be defended in negotiation or challenged on its merits. Financial due diligence does not replace legal, tax, commercial, technical or regulatory due diligence, and we identify where those specialist reviews are needed.
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Scope options
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Full analysis for acquirers and investors, covering earnings, working capital, debt, cash flow and balance sheet risk, with a deal issues register.
Services
Scope, periods and reporting format are agreed in writing before work begins.
Sustainable earnings separated from one-off effects.
Where revenue comes from and how durable it is.
Margin movement explained by driver, not by total.
The cost base a buyer will actually inherit.
How much working capital the business genuinely needs.
Everything that reduces equity value at completion.
Whether profit becomes cash.
Asset quality and hidden obligations.
The investment required to sustain the forecast.
Identifying where specialist review is required.
Quality of earnings
Every adjustment is explained and traceable to the underlying records.
Reported EBITDA
As shown in the financial statements or management accounts.
+/- One-off items
Non-recurring gains and costs identified and explained.
+/- Owner / related party adjustments
Proprietor remuneration and related-party terms adjusted to market basis.
+/- Accounting normalisations
Policy and cut-off effects adjusted for comparability.
+/- Non-recurring items
Events that will not repeat under the new ownership.
= Adjusted / Normalised EBITDA
The earnings base used for valuation, with every adjustment supported.
Normalised EBITDA is a negotiated measure, not a defined accounting figure. Different parties can reach different conclusions on the same facts.
Working capital
Historical Working Capital
Actual position rebuilt from the ledgers.
Monthly Trends
Month-by-month movement rather than year-end snapshots.
Seasonality
Peaks and troughs identified across the cycle.
Normalisation
Distortions, one-off balances and stretched payables adjusted.
Proposed Target Working Capital
A defensible target level for the completion mechanism.
Measures analysed include DSO, DIO, DPO and the cash conversion cycle.
Net debt
Gross Debt
Borrowings, overdrafts and finance obligations.
+ Debt-Like Items
Leases, shareholder loans, accrued interest, unpaid taxes and deferred liabilities.
− Cash / Cash-Like Items
Cash, deposits and readily realisable balances, less restricted or trapped cash.
= Adjusted Net Debt
Subject to the definitions agreed in the transaction documents.
Net debt is defined by the transaction documents. The items included or excluded are a negotiated matter.
Data room
For live engagements this runs through our secure client portal and shared data room.
Client / Target Uploads
Documents provided into a secure, access-controlled data room.
Structured Financial Data
Ledgers and schedules organised into a consistent analysis base.
Analysis
Earnings, working capital, debt and cash flow tested.
Questions
Written question log with tracked responses.
Findings
Issues quantified, with the impact on price or mechanism stated.
Report
Report issued with an executive summary and deal issues register.
Output
Sectors
Why clients engage us
Global coverage
Getting started
Resources
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FAQ
Summary
Primary sources
References are provided so positions can be verified against the current text of the applicable law, guidance or standard. Requirements change; always confirm the version in force for the period concerned.
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