Business consulting
Due diligence
We examine target companies before acquisition from a tax and financial perspective and summarise the risks in a clear report with recommendations.
Service area Business consulting
What matters to you
Acquiring a company requires a careful review of its past performance. Tax risks, one-off effects on earnings and existing commitments can affect the valuation. We bring the relevant points to light before you decide.
The findings feed directly into the negotiations: into the purchase price, warranties and indemnities, or the decision whether an acquisition makes sense at all. We carry out tax and financial due diligence for buyers, investors and banks.
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Tax due diligence
The focus is on tax years that are not yet time-barred. The tax authorities can review tax returns within the statutory deadlines, which go back several years. We examine whether there are risks in this period and assess their potential financial impact.
We check in particular whether tax credits and incentives claimed are adequately documented. We take possible clawbacks and penalties into account in the risk assessment and in our recommendations for the purchase agreement.
- Income tax, corporate income tax and IRAP
- VAT and e-invoicing
- Payroll tax and social security contributions
- Tax credits and grants
- Transfer pricing and transactions with related companies
- Ongoing audits and disputes with the tax authorities
Financial due diligence
Financial due diligence answers the question of how sustainable the target company’s results are. We adjust earnings for one-off and exceptional effects and determine a normalised result as the basis for valuation (Quality of Earnings).
Net financial debt and working capital are equally important. They often determine how much of the agreed enterprise value is ultimately paid as the purchase price. We also analyse forecasts and check whether the assumptions are plausible.
The risk report
The result is a report that focuses on what matters. We distinguish between findings that should affect the purchase price, those that can be covered by warranties or indemnities, and points to be improved after the acquisition.
On request, we prepare a brief report on the main warning signs in advance (red flag report) so that you can decide early on whether to pursue the transaction.
Sell-side preparation
Sellers also benefit from a review before prospective buyers see the documents. A vendor due diligence reveals weaknesses while there is still time to fix them and reduces the risk of unexpected price reductions being demanded during negotiations.
Legal questions, for example on contracts, permits or employment law, are reviewed by lawyers. We coordinate with them so that you get the full picture.
Step by step
How we work together
Define the scope
We agree with you which areas are to be reviewed, how in-depth the review should be and when the results are needed.
Request and analysis
We draw up a request list, analyse the documents in the data room and hold discussions with the target company’s management.
Report
We summarise the findings in a report that quantifies the risks and contains specific recommendations on price and contract.
Implementation in the contract
We help you and your lawyers reflect the findings in the purchase price, warranties and indemnities.
Frequently asked questions
Answers on the scope, documents and results of a due diligence.
Does due diligence make sense for smaller acquisitions too?
Yes. Smaller businesses in particular often lack internal controls, and a single tax risk can be significant relative to the purchase price. The scope of the review can be adapted to size and budget.
How long does a due diligence take?
Usually a few weeks, depending on the scope and quality of the documents. What matters is how quickly the target company provides the information requested.
What documents are required?
Usually the annual financial statements and tax returns of recent years, accounting data, key contracts, documents on financing, tax audits and disputes, as well as current interim figures and plans. At the outset, we draw up a list tailored to the case.
What happens if significant risks are found?
There are then several options: a reduction in the purchase price, specific warranties and indemnities from the seller, retention of part of the purchase price, or a change of structure, for example from a share purchase to an asset purchase. In some cases, walking away from the deal is the right decision.
How can we help you?
In the initial meeting, we clarify your request and discuss what support you need.