Financial due diligence for acquisitions
Financial due diligence tells you, before signing, what you are actually buying. Takmed's buyer's review is scoped for SME transactions: quality of earnings, cash flow, working capital and debt-like items, and how they affect the purchase price.
What you get
- Normalised EBITDA. One-off items, owner salaries and related-party transactions adjusted, so you see the true earning power.
- Cash flow and working capital. Whether profit turns into cash, the normal level of working capital and the effect of seasonality.
- Net debt and debt-like items. Items that pass to the buyer and reduce the price, such as holiday pay accruals, customer prepayments and deferred capex.
- Dependencies and risks. Customer and supplier concentration, key people and the financial impact of contracts.
- A concise report. Findings, their price impact and proposals for the share purchase agreement, such as warranties and the price mechanism.
Legal due diligence is not included in the buyer's review. It is carried out separately with a lawyer.
How the review works
Initial review and scope
We go through the target, deal structure and timetable. You receive a quote with the scope sized to the deal.
Information request
We send the seller a ready document list: typically financial statements, general ledgers, monthly reports, receivables and payables, and key contracts.
Analysis and questions
We reconcile the figures to source documents, interview management and raise follow-up questions.
Report and walkthrough
We go through the findings with you and help carry them into price negotiations and the purchase agreement.
Questions about due diligence
How much does financial due diligence cost?
The price depends on the agreed scope, and you receive a quote before work begins. In SME deals the scope is sized to the transaction and its risks, so the review does not cost what a large-cap deal would.
How long does due diligence take?
It depends on the scope and on how quickly the seller provides the material. The timetable and milestones are agreed in the initial review to fit the deal timetable.
What is the difference between financial and legal due diligence?
Financial due diligence examines earnings, cash flow, the balance sheet and their risks. Legal due diligence reviews contracts, disputes and legal obligations and is carried out by a lawyer. The two complement each other.
Can due diligence be done for the seller?
Yes. A review on the sell side reveals issues early and reduces surprises when the buyer carries out its own review.