Target Financial Due Diligence

Directors of our clients need to ensure that they have all the relevant information to hand before making critical acquisition decisions. We provide our clients with timely, relevant and value-added due diligence advice and reports to enable them to do this.

Notwithstanding that the aim acquisitions is usually to increase sales, enter new markets, rationalise cost bases and share overheads, the quality of the financial due diligence on the target will underpin the success of the deal. It will also assist in price negotiations.

Our typical diligence exercise for a client on a target business will involve:

  • An initial review of the target’s business to identify key “red-flag” issues at the earliest opportunity so that clients can decide whether to proceed or not with the transaction;

  • An in-depth analysis of underlying historic performance, cash flows, assets and liabilities;

  • Identifying key business drivers, trends in profitability and significant concentrations of risk;

  • Assessing the target’s quality of earnings, including the identification of overly aggressive accounting policies;

  • A review of the financial systems, controls, policies and procedures; and

  • A critique of management's forecasts, including the working capital requirements of the business.

Our reports will also include:

  • A summary of the key issues that have been identified by our work;

  • If we have in-depth knowledge of the client’s business, then we will identity potential synergies and benefits to the client post acquisition; and

  • Our views on the associated risk and implications for the deal, including integration and other post-deal issues where appropriate.