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Financial Due Diligence
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Get an in-depth assessment of a business by engaging an expert to perform financial due diligence services.

We decipher the numbers and ensure that your investment decision is backed by clarity, precision and confidence. 

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What Is A Financial Due Diligence?

Financial due diligence services help investors and acquisition entrepreneurs understand the drivers of profit and revenue in the business they’re considering buying. This analysis provides a thorough investigation into the financial health of the entity.

It gives you a normalized view of the financials for the historical period, including things like:

  • Normalized EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization)
  • Normalized Net Working Capital
  • Normalized SDE (seller discretionary earnings)
  • An evaluation the feasibility of forecasts

Financial Due Diligence Checklist

Midwest Due Diligence Checklist

Are you considering buying a business? Make sure you do your homework first.

Get started by downloading our free financial due diligence checklist.

This comprehensive checklist  has been designed by our team to help you assess all the key financial areas of a business that you’re considering for acquisition.

Get Your Due Diligence Checklist

Our Due Diligence Services

When it comes to mergers, acquisitions, and significant investment activities, our financial due diligence services stand out. 

At Midwest CPA , we recognize the complexities and uncertainties investors and business buyers encounter when diving into a company’s financials. We specialize in offering a comprehensive examination of the financials, ensuring you’re not just looking at numbers but understanding their implications.

With our expert guidance and tailored approach in financial due diligence, we ensure that you get a clear, accurate, and comprehensive view of your potential investment.

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"My accountant who I hired a month ago replies to emails at 1am! He has impressed the crap out of me and is now working on financial due diligence for @PIONEERCAPADV clients.

He is doing a Q of E lite for a client taking out a $3.6 million SBA. Be responsible and you earn business in any walk of life. That's the tweet."
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Our Financial Due Diligence Services Process

When you engage us for financial due diligence services, we follow a 3-part system to make sure you have clear communication throughout the process. We’ll alleviate the stress and provide you with financial clarity at the end. This entire process typically takes between 3-6 weeks to complete.

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1

Financial Due Diligence Preparation

  • Scope Your Project: Together, we'll define your due diligence objectives and boundaries.
  • Industry Research: We'll deep dive into the industry to gain insights into dynamics and trends.
  • Information Gathering: We'll collect all the necessary financial documents from the seller, and organize and assess them.
  • Initial Analysis: We'll start by diving into the numbers, pinpointing inconsistencies and pulling out initial insights.

2

Analysis

  • Seller Q&A 1: Address initial queries with the seller.
  • Advanced Analysis: Focus on things like Quality of Earnings (QoE), proof of cash, non-recurring revenues and expenses, evaluate Net Working Capital (NWC).
  • Seller Q&A 2: As the process evolves we'll have additional queries that need to be addresses. We'll also assess the financial projections.

3

Report

  • Gather Findings: All insights and observations are compiled.
  • Report Writing: Compile a comprehensive report of our findings.
  • Review and Finalize: Provide actionable recommendations based on finalized report.

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Benefits Of Financial Due Diligence Services

Benefit from our financial due diligence services, no matter where your investment interests lie. Because we work 100% online, we’re able to serve clients across the US, and have worked with a number of acquisition entrepreneurs from New York to California. Beyond geographical flexibility, some of the key advantages of partnering with us include:

  • Negotiating power: We routinely find discrepancies that buyers can point to in order to re-trade their deal.
  • Financial Expertise: You'll be working with our team who provide financial due diligence services day in and day out.
  • Mitigate Risks: Identify potential financial risks and avoid making significant investment errors in judgement.

Our Promise to You

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Thoroughness

Our financial due diligence services delves deep, ensuring no stone is left unturned. We’re committed to providing you with a comprehensive view of your potential investment.

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Insightful Analysis

With our expertise, we don’t just present numbers; we provide insights. Our analysis will highlight potential risks, opportunities, and areas of concern, ensuring you’re well-equipped to make the best investment decisions.

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Trust

Your trust is paramount. Rest assured, our findings and recommendations are unbiased, objective, and designed solely to support your investment goals.

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If you’d prefer to book a time in our calendar right now, please click below to schedule an appointment.

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Frequently Asked Questions

The due diligence period is a specified timeframe during which the buyer conducts a thorough investigation of the business’s financials, operations, and other critical areas. It allows the buyer to confirm details, identify potential issues, and decide on proceeding with the acquisition.

Financial Due Diligence is crucial in mergers and acquisitions to identify potential financial risks, validate the information provided by the seller, and determine the true value of the business. It helps buyers make informed decisions, negotiate better terms, and ensure a smooth transition post-acquisition.

Quality of Earnings (QoE) is an essential component of Financial Due Diligence. It assesses the sustainability and quality of a company’s earnings, ensuring they are derived from core business operations and are likely to continue in the future. QoE analysis helps in identifying non-recurring revenues, expenses, and other financial anomalies.

While Financial Due Diligence focuses on evaluating a company’s overall financial health. Tax Due Diligence specifically examines the company’s tax compliance, potential tax liabilities, and opportunities for tax savings. Both are essential in understanding the complete financial picture of a business.

The duration of the Financial Due Diligence services can vary based on the size and complexity of the business being evaluated. Typically, it can range from a few weeks to several months. It’s essential to ensure thoroughness and accuracy, so the process shouldn’t be rushed.

Our typical project takes between 3-6 weeks.

 

Yes, a Financial Due Diligence can identify hidden or undisclosed liabilities, ensuring a transparent understanding of a business’s financial position but it is not a financial audit. 

An audit is a specific kind of engagement that checks if financial statements follow accepted accounting standards (usually GAAP in the US).

On the other hand, financial due diligence tries to find patterns and explain them. It also shows a normal version of certain numbers like earnings before interest, taxes, depreciation, and amortization (EBITDA), seller discretionary earnings (SDE), and net working capital (NWC).

So, even though someone doing financial due diligence might look at audited financials (if available), these two processes are quite different.

Each engagement is different, so contact us for an exact quote.

Most of our projects will cost somewhere between $10-20k. This will vary based on the size and industry of the target company as well as the scope of work required.

We bill half of our fee up front with the second half due with the delivery of our report. 

The majority of our clients are buying businesses between $1-10MM. 

It is typical for companies under $10MM to have unsophisticated accounting systems. This makes bad records very common.  

We are equipped to handle these challenges and utilize whatever is available to determine the true earning power of the business you are buying so that you have maximum clarity. 

Most of our clients are purchasing businesses between $1-$10MM. However, even if your deal is smaller than that reach out and we’ll let you know if we can help. 

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