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Founding concepts of financial due diligence

1. What is financial due diligence (FDD) ?

FDD is detailed investigation into accounting records and assessment of past financial performance of the company to help a potential investor in their acquisition. 

In the large pyramid of a "deal" , we manage the financial side prior to acquisition.

2. Who all are involved in a deal 

a) Investor - a PE firm or a corporate

b) Investee - company being acquired 

c) Facilitators - Investment Banks, Insurance companies and underwriters

d) Advisors - Accounting advisors (FDD) , Legal, HR and commercial advisors

 3. What do we do in financial due diligence 

Our focus is on below two items

a) Deep dive in historical financial performance of target company

b) Identify items that may impact valuation of potential deal 

4. What does a typical FDD assignment involves?

A typical FDD assignment involves customised procedures suiting to requirements of clients, potential issues in a target/industry and deal process. 

So essentially, each FDD assignment is unique in itself and that makes the process interesting.

 





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