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Financial Due Diligence – Probot Ventures LLC

Financial Due Diligence

Financial Due Diligence

Any organization considering a potential investment needs to check all the assumptions it is making about that target. Financial due diligence helps both corporate and financial buyers, by analyzing and validating all the financial, commercial, operational and strategic assumptions being made. It uses past trading experience to form a view of the future and confirms that there are no ‘black holes’.

The components of the service are revenue, commercial and market due diligence, synergy validation, maintainable earnings, future cash flows and all operational issues, as well as deal structuring. The financial due diligence process also involves analysis of major customer accounts, fixed and variable cost analysis, analysis of profit margins, and examination of internal control procedures. Financial DD additionally examines the company’s order book and sales pipeline, in order to create better (more accurate) projections.

Many acquirers have a separate section of financial analysis focused on the target company’s debt situation, evaluating both short-term and long-term debt, applicable interest rates, the company’s ability to service its outstanding debt and to secure more financing if needed, along with an overall examination and evaluation of the company’s capital structure.

Probot financial specialists help you by

  • Sufficiently revealing all financial and tax risks related to the target that will help investors to make decisions keeping in mind all the potential risks involved and work on mitigation plan.
  • To analyze a target’s past profitability and cash flow, and according to this forecast target’s future operational prospects.
  • To understand the target’s assets and liabilities (including contingent liabilities), internal control, and the actual situation of operations management, providing a suitable foundation for follow-up negotiations, strategic investment decisions and the formulation of a post-acquisition business plan and integration program.
  • When compiled with other due diligence results such as legal and operational due diligence, to determine whether the item of investment in question is in keeping with the acquiring party’s general strategic targets and investment principles.