Financial due diligence (methodology)

Financial due diligence is a structured investigation of a company's financial performance, position and prospects conducted before an acquisition or investment. Its core components are: earnings quality review (normalised EBITDA construction), working capital analysis (BFR normalisation), net debt assessment (financial debt definition and quantification), cash flow analysis, and business plan review. It identifies restatements that affect price, risks that inform warranty provisions, and assumptions that must be verified for the valuation to hold. A rigorous due diligence methodology is the foundation of every defensible acquisition.

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Example: Hectelion's financial due diligence on a CHF 35.0 million Swiss acquisition delivers: normalised EBITDA of CHF 3.2 million (vs CHF 2.7 million reported, +CHF 500,000 restatements), net debt of CHF 4.8 million (including CHF 1.2 million IFRS 16 leases), and a BFR normalised at CHF 2.9 million (vs CHF 2.1 million reported). These findings result in a CHF 1.5 million price adjustment and strengthened warranty provisions, protecting the acquirer from post-closing surprises.

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Hectelion conducts financial due diligence with rigorous methodology adapted to French and Swiss accounting standards, providing actionable findings that directly impact transaction value and structure.