Financial Due Diligence
Financial Due Diligence is critical before any investment, acquisition, or exit. We conduct rigorous FDD engagements for buy-side acquirers, sell-side vendors preparing for exit, and investors evaluating opportunities — uncovering risks, validating earnings quality, and providing actionable insights for informed deal-making.
What's Included
- Buy-Side Due Diligence for Acquirers
- Sell-Side (Vendor) Due Diligence for Exits
- Investor Due Diligence for PE/VC Funds
- Quality of Earnings & Normalized EBITDA
- Working Capital & Net Debt Analysis
- Tax, Legal & Contingent Liability Review
Why Choose BVACA
Why Choose Us for Financial Due Diligence
De-Risk Your Deals
Our FDD uncovers hidden risks — overstated revenue, understated liabilities, related-party exposures, and accounting irregularities — before you commit capital.
Defensible Valuations
Normalized earnings and adjusted financials from our FDD provide a solid foundation for valuation negotiations and deal structuring.
Transaction-Ready Reports
Detailed FDD reports formatted for boards, investment committees, lenders, and regulatory submissions — with clear executive summaries and red flag highlights.
Proven Results
Case Studies
Strategic Acquirer — Logistics Company Acquisition (Rs 75 Cr Revenue Target)
Challenge
A listed logistics company was acquiring a regional competitor to expand into Western India. The target had Rs 75 crore revenue with reported 14% EBITDA margins. However, the target's financials were prepared on a cash basis, vehicle ownership was split between the company and the promoter personally, and fuel expenses had unusual patterns suggesting potential personal use of company vehicles.
Our Solution
Conducted a 3-week buy-side FDD covering: conversion of cash-basis financials to accrual basis (significant impact on revenue timing), separation of company-owned vs promoter-owned vehicles and their respective revenue/cost allocation, fuel expense analysis by vehicle with GPS correlation, customer contract review (3 major contracts were up for renewal within 6 months), and working capital normalization.
Result
Accrual-basis EBITDA was determined at 11.2% (vs reported 14% on cash basis) — a Rs 2.1 crore difference. Identified Rs 85 lakh in annual fuel expenses attributable to promoter's personal vehicles. The 3 expiring contracts represented 28% of revenue — acquirer insisted on contract renewal as a condition precedent. Deal was restructured with a Rs 4 crore holdback linked to contract renewals and a working capital adjustment mechanism in the SPA.
Sell-Side Vendor DD — IT Services Company Preparing for PE Exit (Rs 50 Cr Revenue)
Challenge
The promoter of a mid-size IT services company wanted to sell a 70% stake to a PE fund. Previous buyer discussions had stalled during due diligence because the buyer's advisors found issues with revenue recognition (milestone vs time-and-material mixing), inconsistent employee cost capitalization, and missing transfer pricing documentation for offshore delivery.
Our Solution
Conducted sell-side vendor DD to proactively address all issues. Standardized revenue recognition policy across all contract types (Ind AS 115 compliant), reversed inappropriate cost capitalization of Rs 1.5 crore over 2 years, prepared complete transfer pricing documentation for the US subsidiary, and compiled a comprehensive Financial Fact Book with 3 years of clean financials, reconciliation notes, and explanatory schedules. Set up an organized virtual data room.
Result
Vendor DD report was shared with 3 potential buyers. The winning PE bidder's due diligence was completed in 12 days (vs 4-6 weeks typical for similar deals). No material adverse findings by the buyer's advisors — all major issues had been pre-addressed. Deal closed at a valuation 10% higher than the previous stalled discussions, attributed to the cleanliness of financials and seller preparedness.
Disclaimer: As per the guidelines of the Institute of Chartered Accountants of India (ICAI), the names of clients cannot be disclosed. The case studies presented above are based on actual engagements, with client identities anonymized to comply with ICAI professional standards and maintain confidentiality.
How It Works
Our Process
Scope & Engagement
We understand the deal context, define the FDD scope (financial, tax, commercial), agree on timelines, and set up secure data room access.
Data Collection & Analysis
Deep-dive into historical financials, management accounts, tax records, contracts, and supporting documents. Management interviews and site visits as needed.
Quality of Earnings & Adjustments
Normalized EBITDA computation, one-time item identification, related-party adjustments, working capital and net debt analysis, and contingent liability assessment.
Report & Deal Support
Comprehensive FDD report with executive summary, detailed findings, red flags, and recommendations. Post-report support for deal negotiations and SPA adjustments.
Ready to get started?
Book a free consultation to discuss your financial due diligence requirements.
Common Questions
Frequently Asked Questions
Buy-side FDD is commissioned by the acquirer/investor to identify risks before committing capital. Sell-side (vendor) FDD is commissioned by the seller to proactively address buyer concerns, accelerate the deal process, and strengthen the negotiating position. Both cover similar areas but serve different stakeholders.
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