Risk & Due Diligence
Due diligence
An evidence-based review of a company, counterparty or commercial opportunity before you commit, so the decision rests on what the numbers and the operating model actually show.
What it is
Due diligence is a structured review of the financial, commercial and operational reality behind a business or proposal. It tests the claims being made against the evidence available, identifies where the risks are concentrated, and sets out what would need to be true for the decision to work.
We scope each review to the decision at hand (an acquisition, a partnership, a major supplier or customer, a new venture) rather than running a generic checklist.
Commercial and financial analysis. Not a statutory audit, legal opinion or regulated investment advice.
When it is useful
- You are acquiring or investing in a company
- You are entering a strategic partnership or joint venture
- A single supplier or customer is about to become critical
- You are committing capital to a new venture or project
- A counterparty’s figures look strong but something is unexplained
- You need an independent view before a board or family decision
What we assess
Scope is agreed up front; not every engagement needs every area.
Financial performance
P&L trend, margins, cash conversion, working capital, debt and liquidity.
Revenue quality
Recurring versus one-off, pricing power, churn, contract terms, seasonality.
Concentration & dependencies
Customer and supplier concentration; key-person and technology dependencies.
Market position
Competitive standing, differentiation and demand drivers.
Operating model
Processes, capacity, systems, reporting quality and scalability.
Growth assumptions
Forecast logic, sensitivity to key variables, and what has to go right.
How we work
Scope
Agree the decision, the questions that matter and the information available.
Review
Analyse financials, contracts, operations and market evidence.
Report
Findings, a ranked risk assessment and the open questions, in plain language.
Decide
Mitigation options, negotiating points or conditions, and a clear view on whether to proceed.
Typical situations
Illustrative situations, not client case studies.
A partnership with a distributor
Revenue concentration, payment behaviour and dependency on a few accounts.
The acquisition of a services business
Whether reported profit converts into cash, and how dependent the business is on its owner.
An investment in a marketplace venture
Growth assumptions tested against acquisition cost and take rate.
Questions
Is this the same as an audit?
No. An audit gives a statutory opinion on historical accounts. Due diligence is a forward-looking commercial and financial review scoped to a specific decision.
What about legal and tax due diligence?
Tax matters are covered with our Tax & Accounting practice. Legal due diligence is carried out by independent legal counsel, whom we can introduce.
How long does it take?
It depends on scope and on how quickly information is made available. We agree the timeline when we agree the scope.
Adviser
Richard Cuaresma helps businesses make better decisions where growth, credit, cash, risk and technology intersect.
Tell us what you are about to commit to. We will tell you what we would look at first.
Discuss a due diligenceConfidential and without obligation.