Overview

A prospective investor is concerned about the target’s:

1. Quality of earnings
2. Adequacy of working capital
3. Unrecorded or contingent liabilities.

We call upon due diligence to analyze these areas and, in broader context, to understand the business of a company, its risks and prospects. These objectives define the scope of due diligence and bring forward a range of tools, methods and techniques to perform the analysis.

The attached bundle includes forms and templates which I have developed during my years in buy-side private equity and investment advisory. Many of them are quite cross-functional and can be used in regular reviews of business performance. They will serve as transaction price adjustments, areas for further investigation or a negotiation piece in your discussions with sellers. A few highlights to mention:

● Complex Financial Statement Analysis

 DuPont Analysis

 Profit Variance Analysis (Bridge Charts)

 Sources and Uses of Liquidity

 

● Income Statement Analysis

 Overall Sales Analysis (Quality of Earnings Schedule, Like-for-Like Analysis)

 Seasonality (creating a cycle plot chart, de-seasonalizing sales and calculating seasonal adjustments)

 Product Analysis (Key Portfolio Statistics, Product Profitability Distribution, Profit Variance Analysis by Product, Price-Volume-Mix Analysis, Product Ramp-up)

 Customer Analysis (Attrition (Churn) Analysis, Contract Expirations and Pipeline, Customer Concentration)

 Employee Analysis (Employee Cost Summary Schedule, Headcount and Salaries, Employee Turnover and Retention, Employee Headcount Statistics)

 Budgeting And Forecasting (Assessing Budget Accuracy, Defining Scenarios Based on Historic Volatilities, Building a Trend Forecast, Interim Budgets, Current Forecast Status By Products, Estimating Reasonableness of the Outlook)

 

●  Balance Sheet Analysis

 Fixed Assets (Fixed Asset Roll Forward, Capex Detalization Schedule)

 Inventory (Inventory Structure, Inventory Movements and Balances, Days  Inventory Outstanding, Inventory Seasonality, Inventory Aging)

 Cash (Cash Conversion Cycle (CCC))

 Net Working Capital

 Net Debt (Debt and Debt-Like Items)

As such, you will find it useful if you are:

– considering a target for potential acquisition
– assisting your client with a potential M&A transaction
– analyzing performance of a company you work for
– trying to understand your business better
– learning how to carry out due diligence

The Excel file contains over 35 sheets and is accompanied by a detailed text guide.

Reviews Add a review
No reviews yet

More From Andrei Okhlopkov

Browse our top rated business templates. See All
Loan Schedule
309
2
This template will help you calculate loan and interest balances, accrued interest at any point in time on loans granted or issued.…
Capex Budget
524
1
 Any company which uses fixed assets in its operations needs to know:   Investment cash flow related to new fixed…
Payroll Budget
780
0
Payroll expenses and employee costs in general form an important and material part of a company’s budget. This template built on the highest…
Travel Budget
703
0
Travel expenses make up an important and material part of a company’s budget. This template built on the highest professional financial modeling…
HR Analytics and Dashboard
1,400
0
This publication contains a set of tools to perform employee analysis and communicate key statistics in a concise, efficient and…
Startup Cap Table
2,176
186
Most startups are initially financed by their founders. They contribute relatively small amounts of money for the company to make…
See All