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Financial due diligence

Experienced due diligence specialists

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Financial due diligence

Financial due diligence provides buyers, investors and lenders with a level of confidence around the funds they deploy into a business.

A financial due diligence exercise provides insight into the financial and operational trading performance of a business. In addition to this, our review and analysis will highlight any areas of risk to you as a buyer, investor or lender and any potential price adjustments to the valuation of the business.

"At Knight Transaction Services we understand that there is no one size fits all approach. Our team are all fully qualified due diligence specialists with experience of working with a range of business types, sectors and sizes."

In undertaking financial due diligence, typically the key areas of focus are the following:

  • Quality of earnings – what is the underlying earnings capability of the business and how does this compare to actual earnings generation.
  • The net cash or debt position of the business – this balance (calculated at the latest available date) will typically have a direct impact on price.
  • Normalised net working capital – what is the underlying net working capital requirement of the business in order to meet current and future trading requirements.
  • Forecast assessment – do the financial forecasts appear reasonable and what are the key risks to their achievability?
  • Reliability of management information – are there any quality or information gaps in the current finance team and data being reviewed?

"Knight provided a thorough financial due diligence process on ComputerTel and due to their industry experience could also grasp the key commercial drivers of the business that was then reflected in their report."

Richard Pennington, CEO of Fournet Limited following the acquisition of ComputerTel Limited.