Mergers and acquisitionsFinancial due diligence
An independent review of a company’s earnings, working capital, debt and tax exposure before a transaction closes, for buyers, investors and lenders, and for sellers preparing for a buyer’s review. Every finding is tied to its effect on price and terms.
When a review is needed
A review is shaped by the transaction and by who will rely on it. These are the situations we cover most often.
Confirming that earnings, cash flow and the balance sheet support the price in the letter of intent, before you commit to final terms.
Testing the historical results and the forecast behind a growth or minority investment, for private equity, venture capital and family office investors.
Assessing debt service capacity, liquidity and the quality of the cash flow a loan will rely on, for lenders financing an acquisition or an expansion.
A review of your own numbers before buyers or investors see them, so issues are found and explained on your terms.
A target based on what the business needs to operate, including seasonality, and a check of the closing balance against it.
Aligning reporting and controls once the deal is done, so the first year under new ownership starts on clean numbers.
How we help
Buy-side and sell-side financial due diligence for private company transactions in Vancouver and across British Columbia. We test the numbers behind the story, so you negotiate from evidence.
Normalized EBITDA, with adjustments for owner expenses, related-party arrangements and one-time items, and recurring results separated from the rest.
The working capital the business needs after closing, its seasonality, and a target that can be defended in the purchase agreement.
Revenue and gross margin by customer, product and channel, tested for concentration and for resilience under different conditions.
Debt service capacity, liquidity, debt-like items and the cash conversion cycle, as a lender or a buyer will see them.
Exposure on income tax, sales tax and payroll filings, and regulatory gaps that could become liabilities or price adjustments, reviewed alongside your tax adviser.
Recommendations to align reporting, controls and the close with the new owner’s requirements in the first months after closing.
Due diligence in Vancouver
Most targets in Vancouver are private and owner-managed, and many have never been through a buyer’s review. Their records may be accurate, but they were not prepared with a sale in mind. The people relying on the review are often from outside the province: strategic acquirers, private equity firms, search funds and the lenders financing them.
That makes the scope matter. We agree it around the risks of the particular deal rather than a standard checklist, and share material findings as they emerge, while they can still shape the negotiation.
Acquisitions here are often financed by banks, credit unions, BDC or private lenders, and each will underwrite the earnings and the working capital in its own way. We know what they test, and we write the findings so the financing moves with the deal rather than behind it.
Owner-managed groups often run several companies with intercompany balances, shareholder loans and shared costs. The review has to define exactly what is being bought and carve its results out cleanly.
Customer deposits, deferred revenue, unpaid bonuses, equipment leases and deferred maintenance are often treated as debt in the price. Identifying them before the purchase agreement avoids a dispute over the closing statement.
Vancouver companies often sell into the U.S. or source from Asia. Currency, customs and customer concentration risks rarely show in a single set of financial statements, so we look at revenue, margins and receivables by currency and market.
Our view
A diligence report that arrives after the terms are fixed is a record, not a tool. The value is in findings that reach the negotiation in time: an adjustment to the price, a specific indemnity, a working capital target, or an earn-out where the forecast is uncertain.
So we rank issues by their effect on value, raise the material ones as soon as they surface, and write the report for the people who will rely on it: you, your lender and your advisers.
Watch: The Right Deal, Done the Right Way
How a review works
Most reviews take two to six weeks, depending on the size of the deal and how quickly the information comes together. You receive a written proposal with the scope, timing and fee before any work begins.
Selling? We run the same review on your numbers before buyers do, so issues are found and explained on your terms.
Have a transaction with a deadline?
Selected clients
Frequently asked questions
Financial due diligence is the process of analyzing a company’s financial health, verifying reported results and identifying risks before completing a transaction or investment, so that price and terms reflect what is being bought.
Depending on deal size and complexity, our engagements typically run from two to six weeks.
An audit gives an opinion on whether the financial statements are fairly presented. Due diligence asks whether the earnings, cash flow and balance sheet support the price and terms of a specific transaction, and looks forward as well as back.
A quality of earnings review focuses on whether reported EBITDA is real and recurring. Financial due diligence covers that and more: working capital, debt, tax exposure and the reliability of the forecast. See our quality of earnings service.
Yes. We help sellers prepare for diligence by identifying issues in advance and presenting the financials for buyer and investor review.
Yes. We also provide business valuation, transaction advisory and capital raising support, and diligence findings often feed directly into them.
Monthly financial statements and the general ledger for the review period, tax returns and filings, payroll records, customer and supplier data, debt agreements and key contracts. We tailor the request to the deal.
Have a question that isn’t covered here? Ask us directly.
Related insights
Start a conversation
Tell us about the transaction and your deadline. We will come back with the questions that matter for your situation.
What happens next
Office
Alphabridge Group Inc.555 Burrard StreetVancouver, BC V7X 1M8
We use your details only to respond to your inquiry.
Whether it is a deal, a raise, a valuation or the way the business is run, we are glad to talk it through.
vasant@alphabridge.co
+1 778 903 4883
Five practices, organized around the decisions our clients face.
Sector depth across the businesses we advise, from early-stage ventures to established operators.
Perspectives on transactions, valuation, capital, performance and strategy.
An independent strategic finance firm, founded in 2016 and led by its principal on every engagement.
