ETA
What is an F Reorganization?
Introduction Whether you are a buyer or a seller of a small business tax-efficiency should be at the forefront of your financial plan. Among the
February 18, 2024
No Comments
Financial Due Diligence
Services
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.
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
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.
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.
"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."
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."
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.
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.
Book A Due Diligence Consultation Today!
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
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.
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.
Trust
Your trust is paramount. Rest assured, our findings and recommendations are unbiased, objective, and designed solely to support your investment goals.
Eric Hsu
2024-02-24
Chris is an absolute top notch M&A financial due-diligence provider. He and I have worked on many, many deals together and not only has his advice and services been reliable, accurate and very actionable, but he has been very responsive to client needs and requests. I always am happy to send clients over to Chris because I know that they will be treated and served very well. Keep Chris in your Rolodex!
Dominick Blue
2024-02-08
I am thrilled to leave a glowing five-star review for Chris, who has been an invaluable asset in supporting both of my companies. His consistent dedication, unwavering engagement, and commitment to educating me on accounting and taxation matters have been instrumental in navigating complex taxation situations with ease. Chris goes above and beyond to ensure that all my accounting needs are met promptly and efficiently. His expertise and professionalism shine through in every interaction, making him an absolute pleasure to work with. I highly recommend Chris to anyone seeking a knowledgeable and proactive CPA who has knowledge is M&A due diligence, accounting, and tax strategy; and genuinely cares about their clients' success.
Nicholas Bundzinski
2024-01-03
Chris and the team have jumped right on cleaning up our books. Received our first monthly review document and it was clear we made the right decision. Easy to read and follow along. A great snapshot of the business and expedient service. I would highly recommend Chris and the team at Midwest CPA for any accounting or bookkeeping services.
Amy Curcio
2023-12-15
Chris with Midwest CPA is extremely knowledgeable and is an excellent source if you're looking for a CPA to help/advise you in the business of real estate. I highly recommend Chris and his team!
Roxy Blaser
2023-12-15
Chris is very knowledgeable and willing to answer all my questions.
Rich Bales
2023-12-13
Had the opportunity to listen to Chris give a webinar on taxes for business owners and businesses. He was at the top of his game and a wealth of knowledge. His clients are lucky to have him in their corner.
Jeremy Petrous
2023-11-30
Intelligent, detail-oriented, responsive. More knowledgeable than any other CPA I've worked with. Highly recommend.
Richard Allen
2023-11-28
Been working with Chris at Midwest CPA for a few months now. Whenever we have a question Chris is quick to respond. We find him to be very meticulous and efficient in all aspects of our business. Our only regret is that we didn't find him sooner.
Will Gano
2023-11-28
Chris is the real deal. He is efficient, thoughtful, and great to work with. He helped me with financial diligence, including q of e, for a manufacturing business.
Matthias Smith
2023-11-27
Chris is one of the best accountants and it’s not even close.
I use him personally and for my business. He is one of the most responsive service providers I’ve ever worked with. My former CPA was great but wasn’t equip to help me as a business owner since the former CPA was focused on personal taxes.
Chris has been a truly invaluable partner / collaborator on numerous M&A deals in the small to medium sized business space, providing financial due diligence to various clients that I’ve worked with ranging from a buyer of a demolition company to a buyer of a niche online goods business. LOI
If you’re looking for a rock solid CPA or someone that is really good at M&A financial due diligence, look no further than Chris’ firm.
Get in Touch!
Fill out our Contact Form to get in touch.
Free Consultation
If you’d prefer to book a time in our calendar right now, please click below to schedule an appointment.
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.
Recent Articles
SMB
Guide to Beneficial Ownership Information Reporting
Introduction Beneficial Ownership Information Reporting begins January 1, 2024 and most companies in the United States will need to report information about the owner’s and
January 22, 2024
No Comments
ETA
What is a Proof of Cash?
Introduction In the complex arena of business acquisitions, it is paramount that you fully vet the business you are buying. Among the various tools available,
January 21, 2024
No Comments