Client one-pager, financial due diligence

Financial due diligence — what it is and why you need it

What it is. Before you buy a business, invest in one, or lend to one, due diligence tells you whether the numbers you have been shown are the numbers you are buying. We rebuild the target's earnings month by month, strip out what will not continue after the transaction, work out the real level of working capital and debt, and identify what could come back to bite you — tax exposures, disputes, contracts that end when ownership changes.

What we need from you and from the target. Monthly trial balances for the last three years; audited accounts and auditors' reports; customer-wise sales by month; a full schedule of borrowings with the covenants; all related party dealings; the status of every tax and legal dispute; the employee list with contract terms; the top twenty customer and supplier contracts; and working capital by month. Also, from you: what you are actually worried about — a diligence briefed on your concerns is worth several times one that is not.