Financial Due Diligence
Expert financial due diligence services covering Quality of Earnings (QoE), EBITDA add-backs, net working capital, and revenue quality for M&A transactions.
What We Do
We provide comprehensive financial due diligence to support M&A activities, ensuring clarity and confidence in your investment decisions. Our services include:
- Build investor-ready databooks with monthly P&L, BS, CF, NWC & Net Debt schedules.
- Reconcile bank statements, invoices & ledgers; perform tie-outs and flux analysis.
- Clean and standardize management accounts; sensitivity & scenario analysis in models.
- Light QoE for smaller deals: revenue recognition, cost allocations, customer concentration.
Outputs You Receive
- Excel databook (linked schedules & formulas)
- Source-to-summary reconciliation pack
- 2–3 page executive note with red flags & opportunities
Timeline: 5–10 business days with NDA-first confidentiality.
Discuss a dealNordic deals — SIE and SAF-T native
The Nordics are our priority market, and the source data there is unusually good once you know how to read it.
- Sweden. We work from SIE4 exports — full transactions and vouchers, not a period summary — and bridge K2/K3 reporting onto the basis you underwrite.
- Norway. SAF-T Financial exports (v1.30 mandatory from January 2025) give the same transaction-level completeness.
- Denmark and Finland. Native general ledger exports from e-conomic, Dinero, Netvisor and Procountor.
- Full CET overlap means same-day turnaround rather than overnight lag.
What we do on the engagement
Quality of earnings
Reported EBITDA walked to a defensible deal basis. We test every adjustment against evidence rather than accepting management's schedule, and we show the bridge so a buyer can see how the number was built.
- Owner and management salary normalised to market rate
- Fair market rent where the entity occupies property it owns — a deduction, not an add-back
- Non-recurring items dated and evidenced, so recurrence can actually be tested
- Pro-forma effects of contracts signed or lost during the period
- Standalone cost estimates where the target sits inside a group
EBITDA add-backs
The area where sell-side packs are most often optimistic. We separate adjustments a buyer will accept from those they will challenge, and we flag the difference before it becomes a price conversation.
- One-off legal, restructuring and settlement costs with supporting documentation
- Related-party transactions restated to arm's length
- Discretionary owner expenses that do not survive a change of control
- Capitalisation policy differences that flatter operating profit
- Add-backs we would expect a buyer to reject, listed explicitly
Revenue quality
Whether the revenue line is as durable as the growth rate suggests. Recognition policy, concentration and contract quality all move the multiple.
- Recognition policy tested against the underlying contracts
- Customer concentration with year-on-year movement per account
- Churn, retention and net revenue retention where the model is recurring
- Price versus volume versus mix decomposition of growth
- Cut-off testing around period ends
Cost base and margin
Where margin actually comes from, and whether it holds. Cost creep is easy to hide in a summarised P&L.
- Gross margin by product, service line or contract
- Personnel cost tied to FTE, with average cost per head derived
- Fixed versus variable cost split
- Cost lines growing faster than revenue, isolated by CAGR
- One-off cost savings that will not repeat
Net debt and debt-like items
What counts as debt is negotiated, not given. Items left out of the seller's calculation come straight off equity value.
- Reported borrowings, overdrafts and finance leases
- Pension deficits under IAS 19
- Lease liabilities under IFRS 16, and their absence under local GAAP
- Declared but unpaid dividends, and deferred consideration
- Cash that is trapped, restricted or required for operations
Working capital
The peg, the seasonality behind it, and the definition that will be argued about at completion.
- Monthly working capital across the full diligence period
- LTM average alongside period-end, since the peg is set on the average
- Seasonality and trend isolated from one-off distortions
- Items that belong in net debt rather than working capital
- Adjustments for stretched creditors, obsolete stock and bad debt normalisation
What you receive
Excel databook
Linked schedules with visible formulas. Every figure traceable to source, so a buyer's team can follow the logic without asking us.
Reconciliation pack
Source-to-summary ties from trial balance through to reported financials, with variances explained rather than left as differences.
Findings report
A written report covering red flags, opportunities and open items — drafted to your house style if you are an advisory firm.
Executive note
Two to three pages for a partner or investment committee: what matters, what it is worth, what to do about it.
Adjustment schedule
Every EBITDA and net debt adjustment listed with its rationale, evidence reference and period-by-period effect.
Open items log
What we could not conclude on and what data would close it — so nothing is silently omitted.
How the timeline works
A first cut in 72 hours is not a finished quality of earnings, and we will not present it as one. Market standard for mid-market QoE is three to four weeks.
72 hours
First-cut databook: trial balance loaded, monthly P&L and balance sheet built, data gaps flagged
Week 1
Bank, revenue and payroll reconciled to source. Working capital and net debt drafted. First red-flag list
Weeks 2–3
Full analytical pack: normalised EBITDA, revenue quality, concentration, peg and seasonality
Weeks 3–4
Findings drafted, senior review gate passed, management questions closed, final delivery
Frequently asked questions
What is the difference between a light QoE and a full quality of earnings?
A light QoE covers the core adjustments — owner remuneration, obvious non-recurring items, headline revenue quality — and suits smaller deals where the analytical budget is limited. A full QoE adds contract-level revenue testing, detailed cost analysis, working capital seasonality and standalone cost modelling. We will tell you which the deal actually warrants rather than defaulting to the larger scope.
How long does a quality of earnings take?
Three to four weeks for full scope, which is the market standard for mid-market transactions. You see a first-cut databook inside 72 hours, so if the deal is going to fail on the numbers it fails early and cheaply.
Is an audit not enough?
No, and this is the most common misunderstanding among first-time sellers. An audit opinion confirms the financial statements are free from material misstatement under an accounting framework. It says nothing about whether earnings are sustainable, whether owner costs are at market, what working capital is normal, or what belongs in net debt. Those are diligence questions, not audit questions.
Can you work under our brand?
Yes. On white-label engagements we deliver in your templates under your branding, and we do not contact your client. See our page for advisory firms.
What data do you need to start?
A trial balance or general ledger export for the diligence period, monthly management accounts, and the statutory accounts. On a Swedish target an SIE4 export covers most of it in one file. Our data-request list sets out the full ask.
Do you cover tax and legal diligence?
No. We are a financial diligence practice. We work alongside your tax and legal advisers and will flag items for them, but we do not opine on tax or legal matters.
Who actually does the work?
People with Big 4 transaction backgrounds, with a senior review gate before anything is delivered. We do not staff a junior pyramid and sign off at the top.