Financial Due Diligence

Financial Due Diligence

Our people are trained to identify, understand, and communicate key value drivers, risks, and the opportunities that matter most to our clients. We concentrate on strategic objectives, negotiation opportunities, and operational efficiencies in defining the service appropriate to each engagement.

We customise our due diligence and other work to client needs. We focus on commercial, financial and transaction mechanism related technical questions (e.g. purchase price mechanisms) relevant to the transaction at hand.

We say what we think. We do not hide our conclusions behind hard-to-decipher provisions; instead, we explain the practical aspects and their relevance to the success of the transaction process. In our view, this is what good due diligence means.

We take into account the broader characteristics of each transaction focusing on the business model. We know from experience what a transaction means for a large corporation, a small entrepreneur, a private equity firm and any other parties involved as well as for the stakeholders: the personnel, management, shareholders, clients and partners.

We advise our clients to recognize the most relevant opportunities and challenges, maintaining at the same time our objectivity and keeping our eyes on the future of the business. We ensure that the deal mission is clear all the time. We will support our clients in the process from its first steps to the finish. 

Our due diligence approach goes beyond Estonian financial reporting standard and incorporates a detailed assessment of business model risks. This approach is supported by:

  • Developing comprehensive work plans that deliver an insightful quality of earnings result as well as reconciliations of free cash flows.
  • Assessing a target’s working capital components in detail with the intent of supporting the working capital peg calculations.
  • Preparing bridge analyses of sales and earnings with each step supported by underlying analysis.
  • Thoroughly analyzing profitability by business segment, customer, product, or service, which is often fundamental to supporting our client’s investment thesis.
  • Focused attention on reserves and accruals on the balance sheet. Understanding all liabilities, on and off the balance sheet, as well as the quality of the assets is key to arriving at a final purchase price for an acquisition.