Financial Due Diligence

The timeline of an FDD varies based on factors like business size, quality of data disclosed, and the speed at which queries are answered. Typically, an FDD spans 4 to 8 weeks, encompassing document collection, data analysis, risk assessment, and report preparation. To prevent delays, it's crucial that the business is well-prepared for sale. This ensures a smoother process and timely completion of FDD, benefiting both buyers and sellers.

Investors scrutinise various aspects including revenue trends, profit margins, and cash flow stability. They're wary of potential risks like over-reliance on specific staff members, which could affect future returns. Assessing market opportunities for growth is crucial, as is evaluating the condition of assets. Investors also focus on streamlining operations and enhancing efficiency to ensure future profitability, requiring a clear understanding of the potential for improvement within the business.

Absolutely. The findings of an FDD significantly impact the valuation of a business. In our experience, over 80% of deals either fall through or require price renegotiation post-FDD. This is often because the initial offer is based on an inaccurate or overly simplistic valuation. Uncovering significant issues is common and they ultimately result in a lower valuation. With borrowing costs high, there's now more emphasis on FDD than ever before, ensuring thorough scrutiny before deals are finalised.

Financial due diligence is essentially the buyer doing their homework to ensure the price they are paying is fair and justified. It involves a thorough examination of the business’s financial health to identify any potential red flags or areas of opportunity. By digging deep into the numbers, due diligence helps the buyer understand the true value of the business and ensures they are making a sound investment, free from any hidden risks which might be revealed post sale.

If due diligence uncovers a problem, we work closely with you to assess its potential impact on the transaction. Depending on the nature and severity of the issue, we help you determine the best course of action, whether that means renegotiating the price, addressing the issue before moving forward, or even walking away from the deal if necessary. Our goal is to ensure that you make an informed decision aware of the full picture of the business.

This is where our expertise lies. With over 350 due diligence projects completed for some of the largest corporates in the UK, we’ve refined a process that goes beyond the surface. Our approach is simple: we dig deeper, challenge assumptions, and use our own financial models to unlock the true value of the business. Through firsthand experience of owning businesses and our financial due diligence (FDD) expertise, we ask the questions others don’t know to ask, look in places others don’t think to look, and focus on what matters most. We provide the details our clients need to make well-informed decisions, giving them the clarity and confidence to move forward.

It might seem like everything is in order, but many issues don’t show up until after the sale, or even when you go to sell again. Financial due diligence (FDD) helps you spot potential risks or opportunities before they become problems. It can also save you money, as valuations are often based on surface-level information and may not reflect the true value. FDD gives you the full picture, ensuring you’re making the right decision for the long term.

The process involves analysing financial and supplementary data. We collect documents like accounting records and software reports, then examine revenue streams and expenses to assess profitability. We also identify risks, such as key man dependence, impacting the business’s stability. This thorough evaluation provides buyers with a clear picture of the business’s financial health, ensuring informed acquisition decisions.