Financial Due Diligence
Assess the earnings, cash requirements, and transaction adjustments that may affect value, financing, purchase price, and closing.
Request a ConsultationWhy Financial Due Diligence Matters
Financial statements show reported results. Financial due diligence helps determine what is supportable for the transaction, identify matters that may affect purchase price or closing, and give buyers, sellers, and lenders a clearer basis for pricing, financing, and negotiating the deal.
Validate Earnings
Normalized EBITDA, proposed adjustments, revenue and margin trends, customer concentration, and earnings sustainability.
Identify Deal Adjustments
Working capital, net debt, debt-like items, commitments, transaction expenses, and other matters that may affect purchase price or closing.
Assess Financial Position & Outlook
Proof of cash, balance-sheet matters, cash flow, capital expenditures, forecasts, and financial models.
How Financial Findings Can Affect Deal Value
A change in normalized EBITDA can materially affect implied transaction value. Working capital, indebtedness, cash, and other findings may also affect closing proceeds and transaction structure.
Illustrative Example: EBITDA Adjustment Impact
A business reports EBITDA of $5.2 million. The analysis identifies $700,000 of adjustments, resulting in normalized EBITDA of $4.5 million.
If the transaction price were based on six times EBITDA:
Illustrative example only. Actual transaction outcomes depend on the transaction terms, valuation approach, and specific findings.
How SEVN Advisory Can Help
SEVN Advisory provides financial due diligence for buyers, sellers, and lenders. Choose a common engagement structure, then tailor the scope with the analyses your transaction requires.
Common Engagement Structures
QoE Lite
A streamlined review of normalized EBITDA, key adjustments, and selected transaction risks.
Full-Scope Quality of Earnings
A detailed review of normalized EBITDA, operating trends, concentration, and earnings sustainability.
Comprehensive Financial Due Diligence
A full-scope QoE combined with selected purchase-price, cash, financial-position, or forecast analyses.
Targeted Financial Analysis
Selected analyses focused on a defined financial issue, transaction risk, or closing consideration.
Tailor the Scope With Additional Analyses
Select the analyses your transaction requires. They may be added to a Quality of Earnings engagement or performed independently when appropriate.
Purchase Price & Closing
Net Working Capital
Historical trends, normalization considerations, and illustrative working-capital analysis.
Net Debt, Debt-Like Items & Commitments
Items that may affect equity value, purchase price, or closing proceeds.
Purchase Agreement & Closing Support
Financial schedules, definitions, and closing calculations, coordinated with legal counsel.
Cash & Financial Position
Proof of Cash & Cash Reconciliation
Bank activity compared with reported revenue, expenses, and cash performance.
Balance Sheet & Net Assets
Selected assets, liabilities, accruals, and transaction-relevant accounting matters.
Cash Flow & Capital Expenditures
Cash conversion, operating cash requirements, and historical investment needs.
Forecasts & Special Situations
Forecast & Financial Model Assessment
Key assumptions, forecast support, and projected financial performance.
Carve-Out & Standalone Analysis
Financial allocations, separation matters, and standalone operating considerations.
Other transaction-specific analyses and support may be added when appropriate.
Why SEVN Advisory
SEVN Advisory combines experienced transaction professionals with a practical, decision-focused approach. We tailor the scope to the deal, concentrate on the financial matters that may materially affect the transaction, and communicate findings in a way buyers, sellers, lenders, and their advisors can use.
Experienced Transaction Professionals
Professionals supporting SEVN Advisory have participated in 150+ Quality of Earnings engagements involving more than $7 billion in aggregate transaction value.
Tailored, Efficient Scope
Procedures are selected based on the transaction, available financial information, timing, and decisions the analysis needs to support.
Clear, Decision-Focused Findings
Findings are connected to potential implications for value, financing, purchase price, transaction structure, and closing.
Experience reflects the collective professional background of participating professionals, including engagements performed in prior roles and affiliations. It does not imply that SEVN Advisory itself was engaged for each transaction.
Typical Engagement Profile
$500K–$50M
$100K–$5M
Up to $50M
Financial Due Diligence FAQ
What financial due diligence options does SEVN Advisory offer?
SEVN Advisory offers QoE Lite, full-scope Quality of Earnings, comprehensive financial due diligence, and targeted financial analyses. The appropriate engagement depends on the transaction, intended user, available financial information, and the questions the analysis needs to address.
What is QoE Lite?
QoE Lite is a streamlined Quality of Earnings engagement generally suited to smaller, less complex, early-stage, or otherwise focused transactions. It evaluates normalized earnings and selected transaction risks without the full breadth of a comprehensive engagement. The exact scope and deliverables are agreed before the engagement begins.
What is included in a full-scope Quality of Earnings analysis?
A full-scope Quality of Earnings analysis generally addresses normalized EBITDA, proposed adjustments and add-backs, revenue and margin trends, customer concentration, seasonality, and earnings sustainability. Procedures are tailored to the transaction and available financial information.
Can working capital, net debt, and proof of cash be included?
Yes. Net working capital, an illustrative working-capital peg, net debt and debt-like items, commitments, proof of cash, and other financial analyses may be included when appropriate for the transaction and agreed in the engagement scope.
Does SEVN Advisory support buyers, sellers, and lenders?
Yes. Financial due diligence engagements may be performed for buyers, sellers, lenders, and other capital providers. The scope, intended user, and reporting approach are established for each engagement.
Is financial due diligence an audit?
No. Financial due diligence and Quality of Earnings are nonattest consulting services. They do not provide an audit opinion, review conclusion, or other form of assurance on the financial information analyzed.
Related Services
Discuss Your Transaction
Tell us what decision the analysis needs to support, and we will help determine an appropriate scope.
Request a Consultation