Pre-Investment Financial
Due Diligence
Before you commit capital, know what you are funding. Independent forensic financial analysis for fund managers, private equity firms and family offices, examining the numbers that vendor advisors want you to accept.
Independent. Forensic.
Pre-commitment.
Most investment losses begin with financial information that was never challenged. Vendor-supplied data is written to attract capital, not to surface problems. EBITDA is shaped in the vendor's favour. Working capital is normalised to inflate the headline multiple.
We check the numbers independently. What has been smoothed, inflated or omitted gets identified before you commit capital.
Review Your Investment →Eight areas where pre-investment financials are routinely misrepresented.
We review each area independently, identify adjustments to stated figures and present findings in a structured report that supports pricing, negotiation and investment committee decisions.
We assess the quality and sustainability of reported revenues, identifying one-off contracts, revenue recognition policies that accelerate income, and customer concentration risks that inflate the headline figure.
We examine the underlying economics at product, customer or site level to identify whether the business is genuinely scalable or whether profitability deteriorates as it grows.
We independently restate EBITDA by removing owner adjustments, management charges, non-recurring items and accounting policy choices that inflate the earnings multiple used to price the investment.
We reconcile reported profitability against actual cash generation, identifying businesses that show strong EBITDA but consume cash, or that have structural working capital requirements that erode returns.
We assess the reliability of the management information provided, examining whether the reporting reflects actual trading, whether systems produce accurate data, and whether forecasts are grounded in verifiable assumptions.
We analyse the working capital cycle to identify the true cash requirements of the business at acquisition, normalising for seasonal patterns, debtor quality and creditor terms that affect the completion mechanism.
We stress-test the financial model and projections provided by management, identifying unsupported growth assumptions, sensitivity to key variables and the gap between forecast and historical performance.
We identify related party arrangements that distort the true cost structure, including management fees, intercompany charges, property rental arrangements and non-arm's-length contracts that will not continue post-acquisition.
Specialist focus in AI,
health-tech and tech-enabled businesses.
Fund managers, private equity houses and family offices instruct me where the target business operates in a sector requiring financial scrutiny beyond standard transaction advisory. I am particularly instructed in AI, health-tech and technology-enabled businesses where revenue recognition, unit economics and path to profitability require specialist understanding.
On instruction, we issue a structured information request covering management accounts, statutory filings, projections, customer contracts and management information. We work with what is available and note where data is absent or unreliable.
We examine the financials independently, normalising EBITDA, reconciling cashflow, assessing working capital and identifying liabilities. All adjustments are explained, quantified and referenced back to source documents.
A structured report covering adjusted earnings, cashflow analysis, working capital findings, identified liabilities and sector-specific risks. Written for investment committee presentation, clear, direct and supported by referenced workings.
Beyond the report, we are available to support price renegotiation, vendor queries and investment committee presentations. Where findings are significant, we work with your legal team to ensure risks are addressed in the transaction documents.
Bharat provided clear and well-reasoned forensic accounting analysis that gave us confidence in our investment decision. His independent review identified adjustments to stated earnings that were material to the price we paid. Exactly what we needed before committing capital.
Pre-investment due diligence questions answered.
Pre-investment financial due diligence is an independent forensic review of a target business before capital is committed. We examine the quality of reported revenues, the reliability of stated EBITDA, the working capital profile, the cashflow position and any liabilities that may not be disclosed in the information memorandum. We review management accounts, statutory filings, financial projections, customer contracts and management information independently, identifying adjustments that affect the investment case. The work is financial in nature and distinct from commercial or legal due diligence, though it complements both. Our findings are delivered in a structured written report within 10 working days of instruction.
Commercial due diligence focuses on the market, competitive position and growth strategy of the target. It does not typically interrogate the financial statements in depth. Financial due diligence, what we provide, is concerned entirely with the numbers: are the revenues real and recurring, is the EBITDA stated on a consistent and arm's-length basis, does the working capital presentation reflect the true cash requirements, and are there liabilities not shown in the accounts. Most investment losses that trace back to pre-investment work arise from financial information that was not independently challenged. Commercial due diligence cannot substitute for that. The two are complementary and together provide the complete picture an investor needs.
We have particular expertise in AI and machine learning businesses, health-tech and medical technology companies, and technology-enabled service businesses. These sectors present specific financial analysis challenges, revenue recognition for subscription and usage-based models, unit economics where customer acquisition cost and lifetime value drive the investment thesis, path-to-profitability assessment and research and development capitalisation. We also work across healthcare operations, property businesses, professional services and owner-managed businesses. If you are uncertain whether your target falls within our scope, contact us and we will advise promptly.
We are instructed by fund managers, private equity houses, family offices and sophisticated individual investors. We also receive instructions from management teams conducting management buyouts where they require independent financial analysis of the business they are acquiring. In some cases, investors instruct us to review a specific area of concern, for example, revenue recognition practices or working capital normalisation, rather than a full financial due diligence scope. We are flexible in scope and will agree the work and fee precisely at the point of instruction with no scope creep.
We work on a fixed fee basis agreed at the point of instruction. The fee reflects the size and complexity of the target, the volume of financial information to be reviewed and the timeline required. We provide a fixed fee quote within 24 hours of receiving the relevant financial information. Reports are delivered within 10 working days of instruction as standard, we can accommodate faster turnarounds where the transaction timetable requires it. There is no hourly billing and no scope creep: the fee quoted is the fee charged. In most cases, the findings from the review have a direct and quantifiable impact on the price paid or the terms negotiated.
Other practice areas you may need.
Five Red Flags Forensic Accountants Find in Target Company Financials
The five recurring patterns that flag a target company as higher-risk during pre-investment due diligence, what each one signals, and how forensic accountants test for them.
What Independent Deal Scrutiny Catches That the Seller's Adviser Misses
What independent pre-transaction scrutiny tests in a seller-prepared information memorandum, and the recurring patterns that change a buyer's view of the deal.
When Does a Growing Business Actually Need a CFO?
A practical guide to the revenue, complexity and decision-load thresholds at which an owner-managed business stops outgrowing its finance function and needs CFO-level capability.
Independent financial scrutiny
before you commit capital.
Whether you are a fund manager, private equity house or family office, we respond promptly and work with precision. No junior gatekeepers. You speak directly to Bharat Varsani FCCA.
19-21 Westfield Lane
Harrow, London HA3 9ED