Three Objectives of Financial Due Diligence
- Ensure the target company is worth the price to be paid by the purchaser by confirming:
- Actual earnings are consistent with seller representations
- Future earnings expectations are reasonable
- Hidden liabilities are unlikely to surface after the transaction
- Enable the purchaser to better understand the target company and develop more effective operational strategies resulting from:
- More complete understanding of the business
- Identification of “hidden treasures”
- Accomplish the items above in a timely and cost-effective manner
Slide titles:

Financial M&A Due Diligence

The Heart of Business Value

Objectives of Financial Due Diligence

Efficient Due Diligence

Significant Risk Sources

Accuracy of Earnings and Cash Flow Representation

Internal Controls & Weaknesses

Reconciling Earnings to Cash Flow

Earnings Normalization

More Clever Owner/Manager Misrepresentations

Detecting Clever Owner/Manager Misrepresentations

Economic Ownership of Critical Intangible Assets

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