Financial Due Diligence (FDD)

Overview

Our work goes beyond analysing historical financial information. We focus on what these insights mean for the company’s future value development. We assess the sustainability of earnings, analyse the quality of EBITDA and cash flow, evaluate working capital and net financial debt, and identify financial risks that could have a material impact on the company’s value or the transaction process. In doing so, we scrutinise one-off effects, accounting and valuation matters, as well as other factors that may be relevant to the purchase price, warranties or closing mechanisms.

Particularly in complex transactions or those involving companies undergoing restructuring, a purely historical analysis is often not sufficient. We assess the robustness of business plans, analyse financing and liquidity structures, and evaluate whether the company’s future development appears realistic and sustainable. Drawing on our extensive experience in restructuring, distressed M&A and transformation projects, we identify risks at an early stage and support our clients in making sound investment decisions, even in challenging situations.

In many transaction processes, a two-stage approach has proven effective. A Red Flag Report provides transparency within a short timeframe on key risks, potential deal breakers and areas requiring more detailed analysis. This is followed by a comprehensive Financial Due Diligence with clearly defined areas of focus tailored to the client’s objectives and the specific characteristics of the transaction.

Financial Due Diligence delivers the greatest value when combined with Commercial and Operational Due Diligence. Linking financial findings with market, strategic and operational analyses enables a comprehensive assessment of the target company and provides a robust basis for investment decisions, purchase price negotiations and the successful execution of the transaction.

Our approach goes beyond identifying risks. We create transparency around the economic and financial dynamics of a business and provide the sound basis investors, lenders and companies need to execute transactions with clarity and confidence.