Financial Due Diligence

Posted By: FinXcel 2 years ago

Due diligence implies the investment appraisal through assessment of key risks in a business of potential investee and the contributory factors that derive cash flows and profits. Investee can be a complete business or a segment, identifiable organised part of a business, an asset or group of assets, shares in the business, which is termed as shares, business or assets mergers and acquisition.

Why it is necessary to conduct Due Diligence?

Due to the complex nature of acquisition and merger transactions, it is difficult for an investor to understand how the effect of significant investment in investee shares or business synergy can add value for an investor, thus it is essential to conduct detailed profitability/cash flow analysis and risk assessment of an investee business, to determine the Return on Investment (ROI) or effect of synergy.

Key analysis factors for Due Diligence

  • Control environment and Management Information System (MIS)
  • Human resource concerns
  • Financial and operational risk
  • Earnings, including usual earnings and by considering one-off events.
  • Financial indicators
  • Working capital
  • Liquidity and solvency
  • Financial projections and ROI
  • Legal & regulatory issues and requirements
  • Long and short-term profitability/cash flow
  • Capital commitments and contingent liabilities
  • ROI and service/product delivery turnaround time compare to leading competing businesses.

How we stand out as an Expert Investment Appraisers

We understand that the due diligence studies requires a consortium of professionals with relevant experience and technical knowledge in financial analysis, market studies, technical analysis and governance skills; therefore, we have developed a multi-disciplinary and multi-skilled team with requisite expertise to conduct due diligence engagements which meets our client’s requirements through our quality due diligence reports that includes recommendations to make well-informed decisions for investment.

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