Financial due diligence

Delivering comprehensive Financial due diligence services (FDD) is a significant part of our portfolio at Consilium Chartered Accountants, now exceeding £250m in deals supported. This page outlines how we approach Financial due diligence projects, the clients we work with and how FDD works in practice.

• Our approach to Financial due diligence
• Who are Consilium’s FDD clients?
• How does FDD work in practice?
• Why is FDD important for investors and vendors?
• Why choose Consilium for Financial due diligence?

Due diligence built on exhaustive research, client focus and straight answers

Financial due diligence is the independent assessment of a company’s financial position, performance and outlook in the context of a transaction. In practice, it involves much more than simply reviewing a company’s historic accounts.

At Consilium, we examine areas such as the target’s earnings quality, cash generation, working capital requirements, debt profile, and future projections, while also assessing the finance function and the reliability of reporting processes.

Consilium’s approach to Financial due diligence is built upon three pillars:

1. Exhaustive research: Our job is to ensure clients know every detail about a target business, the realities of its operations and how they can mitigate any risks in their investment decision. Consilium works hand in hand with clients, meaning we can advise them from the very first discussion about an acquisition or investment
2. Client-focused outputs: Every deal, client and target business is unique. At Consilium, we tailor each FDD project to ensure the client receives the data, insight and recommendations they need to properly assess their proposed investment. This is categorised based on the client’s objectives – a focused, by-exception review or a comprehensive deep dive
3. Straight answers: We don’t sit on the fence when it comes to FDD. So, our clients can expect a candid appraisal of each proposed transaction. Consilium’s due diligence reports come with clear conclusions and recommendations, supported by real data and our extensive experience.

Who are Consilium’s FDD clients?

Since 2013, we have been providing FDD services to various buyers, lenders and investors, including:

• Financial due diligence for acquisitive businesses
• Financial due diligence for banks and lenders
• Financial due diligence for private equity and venture capital.

Consilium provides financial due diligence services on both the buy and sell sides of a transaction. This means vendors can also work with us to ensure they get the same perspective on their business as a prospective buyer might.

Our highly experienced team works with clients in Scotland and across the UK, offering flexible, client-focused and cost-effective Financial due diligence services. To learn more, please contact our lead Partner, Linzi Wilson.

How does Financial due diligence work in practice?

Financial due diligence starts with agreeing and outlining a scope of work that is tailored on a business-by-business basis. Often, the scope will require Consilium to provide an analysis of the historical performance and future projections, along with consideration of the financial reporting environment, working capital, cash flow and liabilities of the target business.

Typically, we are commissioned to undertake FDD as part of:

• Pre-purchase due diligence
• Pre-lending assessments
• Vendor pre-sale due diligence
• Pre-investment due diligence.

Working with our clients, we customise the scope of work to ensure our report focuses on the key concerns relevant to each transaction. Each client can decide to focus on or exclude any area they choose, but typical areas covered include:

• Assessment of finance function: Current structure, future hiring needs, suitability of financial reporting and controls
• Analysis of historic trading: Revenue and margin trends, sustainability of growth patterns, seasonality, key cost drivers, and cash burn
• Quality of earnings: Adjusted EBITDA, revenue recognition, and one-off items
• Balance sheet: Trends, asset recoverability, nature of liabilities
• Working capital: Trends, normalisation, and implications for deal value
• Net cash/debt: Underlying position, debt-like items, and implications for deal value
• Projections review: Reasonableness and achievability of assumptions, ability to service debt, deferred consideration, cash runway, covenant compliance
• Corporate tax, employment tax, VAT: Review of processes and submissions, assessment of any liabilities or exposure
• Agreed-upon procedures: Targeted procedures providing assurance on specific focus areas, e.g. ARR verification, historic cash receipts, unit economics, pipeline, CAC/LTV
• SPA advisory: input into purchase price mechanisms and protections.

Why is FDD important for investors and vendors?

By instructing Consilium, a purchaser or investor can consider whether the risk profile, structure and value of the investment are appropriate before progressing with the transaction. Similarly, a vendor can take remedial action on areas of weakness to maximise the value of their business and smooth out the sale or investment process.

For a confidential discussion about your FDD requirements, please contact our lead Partner Linzi Wilson.

Why choose Consilium for Financial due diligence?

We pride ourselves on attention to detail and hands-on involvement of our lead Partners. Our entrepreneurial background ensures we offer a commercial mindset, and our size lends itself to speed and agility as deals evolve.

As a full-service Accounting, Audit and Tax advisory firm, we can also call on the expertise of colleagues to ensure investment transactions are completed as efficiently as possible.

To learn more about our FDD services, please contact our lead Partner Linzi Wilson.

Take a look at our track record of providing Financial Due Diligence services. Alternatively, meet the Corporate Finance team at Consilium Chartered Accountants.

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