itsual M&A Due Diligence (Financial)
Overview
Financial due diligence tests whether the numbers supporting a deal are real, sustainable, and complete. It protects against overpaying and post-close surprises.
When to Use
- Buy-side financial diligence
- Sell-side preparation
- Investment committee support
- Post-LOI deep dive
Core Areas
- Quality of earnings (normalized EBITDA)
- Working capital normal levels and pegs
- Net debt and debt-like obligations
- Revenue quality and customer concentration
- Contingent liabilities and commitments
Principles
- Adjustments should be evidenced, not aspirational
- One-time items cut both ways
- Working capital disputes destroy deal value post-close
- Diligence findings must feed valuation and SPA terms
Verification
- QoE bridge is documented
- Debt-like items are inventoried
- Findings map to price or protection mechanisms