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Financial Due Diligence

Contact TAP GLOBAL today for bespoke Financial Due Diligence of any business. Our team of experts will conduct all scrutiny and checks for a hassle-free experience.

Package inclusions:

Advisory on issues and risks involved in the business
Identification and rectification of all the risks involved in the business
Physically and documentarily checking the assets of the business
Checking the incoming and outgoing cash in the business
Advisory on the working Capital formulation of the business
Advisory on the financial standing of the business
Advisory on Mergers and Acquisitions

Overview of Financial Due Diligence Service

Bankers, Investors and acquirers rely on Financial Due Diligence as the standard before finalising a transaction in the corporate arena. Investors generally utilise this tool in the pre-assessment period as this detailed and sophisticated report concerns the investee's financial health. The companies also prepare for mock financial due diligence before initiating the investment rounds for their business.

A Financial Due Diligence Report is an investment report that is an essential document that both investors and promoters utilise to check the viability of the financial transaction. TAP GLOBAL is a global consultancy firm which provides legal, accounting and auditing services to clients worldwide. We offer end-to-end consultancy in creating an independent financial due diligence report whilst scrutinising each and every aspect of the business. We are trained to understand and identify the critical value drivers, opportunities and risks that matter to our clients.

Our Financial Due Diligence team carries out reviews based on the verification of records and meetings conducted with key persons, along with an extensive analysis of data and information. We verify compliances, highlight potential risks and liabilities, and provide critical inputs for structuring your transaction. We also identify potential risks that must be documented through representations, warranties, and indemnities. Our team carries out Financial Due diligence by verifying the organisation's books, conducting meetings with the concerned person, and analysing data and information. We demonstrate compliances and other set procedures in order to make and provide critical inputs on different business variables that may affect the transaction. We are committed to providing independent and concentrated input on the strategies, negotiation and operational efficiencies to provide seamless communication and information in every engagement.

What is Financial due diligence?

Financial due diligence is a detailed investigation of the targeted company's books to understand any business's financial and operational health. This analysis is profound and technical, which introspects the business's historical and present trends that solidify its market. This investigation is done by an outside agency directed by a potential buyer/investor ready to invest some money into the said business. The report generated analyses the business's current standing on which the party executes the decision of investing or buying the entity. Financial due diligence offers a variety of deals for the seller; mock reports help them leverage their position in the market and understand the flaw their business may possess.

This service helps the potential buyer/investor to have a closer look at the business's financial health as this uncovers the facts that may or may not be present solely in the books of accounts of the company.

Types of Financial Due Diligence

Sell-Side Financial due diligence

Sell-side financial due diligence refers to the investigations of all the relevant details by the promoter/seller to rectify any mishaps that might hinder the incoming investment or sale of their business. For the seller/promoter, it is essential that the issues they rectify his business face in due course before the buyer/investors analyse the business's financial health. The consultants must perform the investigation in a manner that is corrective for the entity.

Financial due diligence Buy-Side

The target company should be investigated thoroughly by the buyer/investor before investing their money into the entity. This process is completed by a transaction advisory expert with relevant experience managing complex corporate transactions. The buy-side due diligence requires a comprehensive, detailed analysis of all the factors of the business as it directly affects the business cycle and other essential business activities.

Financial Due Diligence Services

Drafting a detailed FDD report:

After a careful assessment of the books of the target company, professionals at TAP GLOBAL will draft a report containing all the important facets of the targeted business. After a thorough process of information, including the following:

Issues and risks involved in the business
Identification and rectification of all the risks involved in the business
Physically and documentarily checking the assets of the business
Checking the incoming and outgoing cash in the business
Advisory on the working Capital formulation of the business
Advisory on the financial standing of the business

Our team of professionals will critically scrutinise each and every aspect of the business and draft a detailed report based on the performance of the business on certain parameters.

For the potential buyers/investors, the report will make suggestions on whether such investment will be fruitful for their business growth and the sellers/promoters will provide solutions to the leakages and balances occurring in their business.

Merger and Acquisition advisory

Mergers and Acquisitions are also known as M and A (M&A). Mergers and Acquisitions are complex transactions between two or more entities. Around the globe, many companies utilise mergers and acquisitions services provided by consultants and investment banks. This area is broad and requires the experience and expertise of consultants. Mergers and Acquisitions encompass agreements and transactions between two parties. Understanding the issues faced in a relevant merger or acquisition scenario is essential.

Advisory on different types of mergers
Advisory on different types of acqusitions
Legal Framework for M&A service
Financial Due Diligence Report for Mergers and acquisition services.
Pre-Merger Advice and Post-Merger Advice.

Financial Due Diligence Checklist

Income Statement:Income statements are the first line of paperwork that needs to be identified to ascertain the entity's financial position. There is a need to check the business's expenses, such as travel and other miscellaneous expenses.
Balance Sheet: The valuation of assets and liabilities of the business is represented by the company's balance sheet. To check whether the business is not bloated with liabilities and check the company's debt level. This valuation will help make the due diligence process very effective in concluding the business's financial health.
Cash Flows:Checking the business's cash flow is an essential checklist for an effective investigation of the business. The operational status of the company is represented by the status of the cash flow statement of the company.

Financial Due Diligence: Benefits

FDD makes both parties take decisions wisely. It enables wiser decision-making among the parties
Helps in assessing the financial statements of the company
Recognition of the core issues which helps the buyer/investor in making an informed decision

Helps and identifies the strength and weaknesses of a company
Provides transparency with regard to business operations and the financial health of your business
Helps in assessing the financial performance of your business.

TAP GLOBAL Procedure in Conducting Financial Due Diligence

Planning:

The planning stage comprises the following:

Understanding the business and operations of the target company
Checking on your requirement and assessing whether the business deal will be effective for you
Checking on the public books of the company, like financial statements

Research:

The research step contains the following

Reviewing the financial and operational data of the company
Checking and verifying all the policies put forth and their adherence to the company
Evaluating the earnings, customer base and the USP of the targeted company

Verification/ Analysis:

This step involves the following

Analyse the income statement of the target company. Analysing the income statement, Balance sheet and Cash Flows of the business
Physical as well as documentary assessment of all the assets of the business.
Debt and liability analysis of the business

Financial Due Diligence Report

The final step is to draft a detailed Financial Due Diligence Report which should include the following;

The summary of all the findings should be present in the report, which should distinctly state all the issues found during the investigation.
The report must set out recommendations for the targeted company
It should conclude with the solutions of whether the deal be considered or not as per the investigation

Frequently Asked Questions

Who Conducts Financial Due Diligence?

Any entity that wishes to enter into a transaction or buy a stake in another business may initiate the Financial Due Diligence Process.

Is it important to perform Financial Due Diligence before a Merger or Acquisition?

Yes, it is highly recommended, as the chances of bearing a significant loss after the transaction is reduced after Financial Due Diligence.

What are the essential data required for conducting Financial Due Diligence?

The financial statements of the company, including

Financial Statement
Cash Flow
Balance sheet
Other information like rules and policies of the business.

Who drafts the FDD report?

The consultants who conduct the investigation and verify all data draft the Financial Due Diligence reports

Can the seller/promoter conduct Financial Due Diligence in their own company?

Yes, any party to the transaction can conduct a fair investigation. The seller may require to check up on the working of all the financial aspects of their business.