The balance sheet impact of finance leases under IFRS 16 creates a structural increase in total assets (right-of-use assets) and total liabilities (lease liabilities), reducing equity ratios and increasing apparent leverage. For highly lease-intensive businesses — retail chains, hotel groups, logistics operators — this impact is material: debt/equity ratios may double, and covenant calculations based on net debt must be adapted. In financial due diligence, the analysis must clearly separate the IFRS 16 balance sheet impact from underlying financial indebtedness to give acquirers an accurate picture of the company's true leverage and debt capacity.

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Example: a Swiss hotel group presents total balance sheet debt of CHF 45.0 million, of which CHF 28.0 million is IFRS 16 lease liabilities (property leases) and CHF 17.0 million is bank debt. The true financial leverage (bank debt only / EBITDA pre-IFRS 16) is 2.4x — significantly more manageable than the apparent total leverage of 3.6x. This distinction is critical for assessing post-acquisition refinancing capacity and covenant compliance.

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Hectelion decomposes IFRS 16 and financial debt in every due diligence to provide acquirers with accurate leverage and debt capacity assessments.