Valuing working capital and identifying off-balance sheet risks.
KPMG stresses the seller’s management forecast. They look for "hockey stick" projections (aggressive growth in the final year). They model sensitivities—what happens to EBITDA if raw materials rise 10%? What if a key customer leaves?
Adjusting for the full-year impact of a mid-year acquisition or price hike. 3. Quality of Revenue
This section examines the health of the target’s balance sheet, ensuring that assets are not overstated and liabilities are fully disclosed. financial due diligence report kpmg pdf
Plug the normalized working capital and sustainable margin trends discovered by KPMG directly into your ROI and LBO models to ensure your investment returns are realistic.
Measuring Days Sales Outstanding, Days Payable Outstanding, and Days Inventory Outstanding against industry benchmarks to identify operational inefficiencies. Pillar III: Net Debt & Debt-Like Items
Personal expenses run through the business by private founders. They model sensitivities—what happens to EBITDA if raw
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An FDD report is an independent analysis of a target company’s financial health. Unlike a standard financial audit, which looks backward to ensure regulatory compliance, FDD evaluates the sustainability of earnings and looks forward to assess future deal value. Key Objectives
KPMG analysts look for non-recurring items that inflate or deflate profit. Common adjustments include: KPMG offers —a seamless
Understanding how the business generates and consumes cash.
Recognizing that financial risks rarely exist in isolation, KPMG offers —a seamless, coordinated service across the core due diligence pillars of finance, tax, and legal. This approach provides a central, coordinated team helping clients navigate financial, tax, and legal issues simultaneously, ensuring a comprehensive understanding of the target business.