Due Diligence Report

A due diligence report is the synthesis document produced at the end of a financial, legal, tax or commercial investigation mission on a target company. It sets out in structured form the findings, identified risks, recommended adjustments and attention points that will condition the investment decision, transaction structuring and SPA negotiation. It is the central deliverable of any financial due diligence mandate.

A standard financial due diligence report comprises: an executive summary (major findings, EBITDA adjustments, red flags — 2 to 5 pages summarising the essentials for decision-makers), a quality of earnings analysis (accounting to normalised EBITDA bridge, with each adjustment documented), a working capital and net debt normalisation review, a financial projections review (business plan assumption validation), and a risks and attention points section (contingent liabilities, red flags, residual uncertainties).

In acquisition financing, a financial due diligence report produced by an independent firm like Hectelion is typically required by lenders (banks, debt funds) as a condition precedent to granting the acquisition financing. Its quality and rigour directly condition lender confidence in the financing structure.

Example: Hectelion conducts financial due diligence on a Vaud SME for a PE fund. The 45-page report identifies: normalised EBITDA of CHF 2.1 million (vs CHF 1.8M accounting), adjusted net debt of CHF 3.4 million (vs CHF 2.9M declared — CHF 500K off-balance sheet liabilities identified), and 3 red flags (38% client concentration, critical supplier contract up for renewal, unprovisioned labour dispute). These findings lead to a CHF 1.2 million reduction in the offer price.

At Hectelion, we produce clear, structured and actionable due diligence reports, designed to facilitate decision-making and price negotiation in Franco-Swiss transactions.