Financial Due Diligence

Assessing Financial Health & Risk Before Transactions

Financial due diligence provides buyers, investors, and lenders with an independent assessment of a target company's financial health, uncovering risks and quality-of-earnings issues that may not be apparent from statutory financial statements.

We conduct financial due diligence covering earnings quality, working capital, debt, and contingent liabilities, providing a clear basis for valuation, negotiation, and deal structuring.

Our Financial Due Diligence Services

Quality of Earnings Analysis

Analysing the sustainability and quality of reported earnings.

Working Capital & Net Debt Assessment

Assessing working capital trends and net debt position.

Contingent Liability & Tax Exposure Review

Reviewing contingent liabilities and tax exposures.

Related Party Transaction Analysis

Analysing related party transactions and their commercial substance.

Financial Statement Normalisation

Normalising financial statements to reflect sustainable operating performance.

Red Flag Reporting for Investors/Lenders

Reporting key risks and red flags identified during diligence.

Why Financial Due Diligence Matters

Uncovers hidden liabilities and financial risks before deal closure
Supports accurate valuation and price negotiation
Provides lenders and investors confidence in financial data
Identifies working capital and cash flow risks
Assists in structuring deal terms and indemnities
Reduces the risk of post-transaction disputes

Frequently Asked Questions

What is financial due diligence and when is it conducted?

Financial due diligence is an independent review of a target company's financial position and performance, typically conducted before mergers, acquisitions, investments, or significant lending decisions.

What is quality of earnings analysis in due diligence?

Quality of earnings analysis examines whether reported profits reflect sustainable, recurring business performance, adjusting for one-off items, accounting policy choices, and non-operating income or expenses.

How does financial due diligence differ from a statutory audit?

A statutory audit provides assurance that financial statements comply with applicable accounting standards, while financial due diligence focuses on evaluating financial risks and normalised performance relevant to a specific transaction.

Who typically commissions financial due diligence — buyer or seller?

Both buyers and sellers may commission due diligence; buy-side diligence protects the acquirer's interests, while sell-side or vendor due diligence helps sellers present a well-documented position to prospective buyers.

What are common red flags identified during financial due diligence?

Common red flags include unsustainable revenue recognition practices, understated liabilities, deteriorating working capital, undisclosed related party transactions, and unresolved tax or legal exposures.

Talk to Our Financial Due Diligence Team

From assessment to execution, we help you navigate financial due diligence with clarity and compliance.

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