Financial Due Diligence Checklist

Financial Statements & Reporting

0/15

Historical Financial Statements

Audited financial statements (3-5 years) Management financial statements (current year/interim) Trial balances and general ledger details Notes to financial statements Management representation letters Auditor management letters Board minutes related to financial matters Chart of accounts and accounting policies

Quality & Controls

Quality of earnings analysis Revenue recognition policies review Internal controls assessment Significant accounting estimates review Related party transactions analysis Subsequent events review GAAP compliance assessment

Revenue & Margin Analysis

0/14

Revenue Analysis

Revenue by product/service line Revenue by geography/market Customer concentration analysis Seasonal revenue patterns Contract revenue/recurring revenue Pipeline and backlog analysis Revenue growth drivers

Margin Analysis

Gross margin by product/service Cost of goods sold breakdown Operating margin trends Margin pressure analysis Pricing strategy and power Cost structure analysis Competitive margin comparison

Normalized EBITDA Calculation

0/12

Add-backs

One-time and non-recurring expenses Owner/related party adjustments Non-cash charges (stock comp, impairments) Transaction and due diligence costs Restructuring and integration costs Litigation and settlement costs

Validation & Analysis

Management EBITDA bridge documentation Supporting documentation for adjustments Recurring vs. non-recurring analysis Normalized EBITDA margin trends Peer comparison of EBITDA multiples Management fee adjustments

Working Capital & Cash Flow

0/13

Working Capital Components

Accounts receivable aging and quality Inventory turnover and obsolescence Accounts payable analysis Prepaid expenses and accruals Working capital trends and seasonality Days sales outstanding (DSO) Days inventory outstanding (DIO)

Cash Flow Analysis

Operating cash flow trends Free cash flow calculation Cash conversion cycle Capital expenditure requirements Working capital financing needs Cash management and controls

Normalized Working Capital Calculation

0/10

Normalization Adjustments

Seasonal normalization adjustments One-time working capital items removal Non-operating items exclusion Related party adjustments Industry benchmark comparison

Analysis & Validation

Historical working capital as % of revenue Normalized WC target calculation WC adjustment mechanism at closing Management working capital projections Supporting documentation review

Net Debt & Debt-Like Items

0/11

Debt Components

Bank debt and credit facilities Equipment financing and leases Shareholder loans and advances Accrued interest and fees Capital lease obligations Pension and post-retirement obligations

Cash & Debt-Like Items

Cash and cash equivalents Restricted cash analysis Deferred compensation liabilities Contingent consideration Net debt calculation and reconciliation

Other Optional Elements

0/15

Tax Analysis

Tax returns (3-5 years) Tax provision analysis NOL and tax credit analysis Tax audit history Transfer pricing documentation

Legal & Contingencies

Litigation and claims analysis Warranty and guarantee exposures Environmental liabilities Insurance coverage analysis Regulatory compliance review

Management Projections

Management business plan Financial projections (3-5 years) Key assumptions documentation Sensitivity and scenario analysis Historical vs. projected comparison

Due Diligence Summary

0

Completed

90

Remaining

0

Sections Done

0%

Complete