Financial due diligence services for business transactions

Expert – Professional – Reliable

Financial Due Diligence Services

Independent financial due diligence from London chartered accountants and registered auditors

Every transaction rests on a set of assumptions. That profits are sustainable. That working capital is at a normal level. That debt is what the balance sheet says it is. Financial due diligence tests those assumptions before you commit.

At Accendo, our financial due diligence work gives buyers, sellers, investors and lenders an independent view of what sits behind the numbers. We examine how a business actually earns, what it genuinely costs to run, how cash moves through it, and which figures will not repeat once the deal completes. The output is a clear, readable report that supports your price, your funding case and your negotiating position — not a document that simply restates the management accounts in a longer format.

We are a London-based firm of chartered accountants and statutory auditors, registered as auditors in the United Kingdom by the Association of Chartered Certified Accountants. That audit background matters here. It means the person reviewing revenue recognition, provisions and cut-off on your target has spent years testing exactly those areas, and knows where reported figures tend to bend.

What our financial due diligence covers

Quality of earnings — normalised, maintainable EBITDA, with one-off, non-recurring and owner-related items identified and explained

Revenue and margin analysis — by customer, product, contract and channel, including concentration and retention risk

Working capital — normal levels, seasonality and the peak-to-trough swings that drive the completion mechanism

Net debt and debt-like items — borrowings, leases, deferred consideration, accrued bonuses, dilapidations and unfunded obligations

Cash flow and conversion — how reliably reported profit turns into cash

Forecast review — the assumptions behind the plan, and whether trading history supports them

Tax exposures — corporation tax, VAT, PAYE and employment status risks

Records, systems and controls — how much reliance the reported figures can reasonably carry

Buy-side, vendor and funder support

Buy-side due diligence helps acquirers understand what they are buying, price it properly, and shape warranties, indemnities and completion adjustments around the risks actually found.

Vendor due diligence and exit readiness puts sellers in control of the narrative. Issues identified by your own adviser can be explained, corrected or presented in context. The same issues found first by the buyer’s adviser can quickly become price pressure or a negotiation point.

Lender and investor reviews give funders proportionate comfort on affordability, covenant headroom and the credibility of the forecast.

Scope that fits the deal in front of you

Not every transaction needs a full-scope report. A £1.5 million owner-managed acquisition and a multi-entity group deal call for very different work, and paying for the wrong one helps nobody. We agree scope, timetable and reporting format at the outset, keep fees proportionate to deal value, and raise findings as we uncover them rather than holding them back for a final draft.

Where Accendo acts as auditor to an entity involved in a transaction, we consider applicable ethical and independence requirements before accepting due diligence or advisory work.

Senior people do the work and speak to you directly throughout.

Speak to our financial due diligence team on 0207 523 5356, or book a consultation.

Frequently Asked Questions

Financial due diligence is an independent investigation of a business’s financial position and performance, carried out before a purchase, sale, investment or loan. Its purpose is to establish whether the reported figures give a fair picture of how the business trades, and to surface anything that could affect price, structure or the decision to proceed at all.

In practice, the work starts with an information request list and access to the accounting records, usually through a data room. We then analyse historical trading, typically over two to three years, on a monthly basis rather than relying on annual accounts alone. Monthly analysis is where patterns emerge: seasonality, one-off contracts, margin drift, customer losses that annual figures smooth over entirely.

From there we move into earnings quality, working capital, net debt, cash generation and the forecast. Management meetings run alongside the analysis, because numbers rarely explain themselves. A conversation about why gross margin fell in the third quarter often reveals more than a further week of spreadsheet work.

Findings are reported as we go. The final report sets out the key issues, quantifies them where possible, and explains what each one means for your negotiation.

This is the question we are asked most often, particularly when a target already has audited accounts and the buyer wonders whether further work is justified.

An audit provides an opinion on whether financial statements give a true and fair view, in accordance with an applicable reporting framework. It is backward-looking, tightly regulated in scope, and addressed to the company’s members. Materiality is set at the level of the accounts as a whole, which means an issue can be genuinely important to a buyer and still fall well below the audit materiality threshold.

Financial due diligence asks a different question entirely: what is this business worth to you, and what are you exposed to if you buy it? It is transaction-focused and forward-looking. It examines maintainable earnings rather than statutory profit, normal working capital rather than a single year-end snapshot, and the reliability of forecasts rather than the accuracy of history alone.

Audited accounts are a useful foundation and reduce certain risks. They are not a substitute. A clean audit opinion tells you the accounts are fairly stated; it does not tell you that the largest customer has given notice, or that last year’s profit relied on a contract that has since ended.

Timescales depend on deal size, group structure, the quality of the target’s records and how quickly the seller responds to information requests. For a straightforward owner-managed business with reasonable bookkeeping, three to four weeks from data room access to final report is a realistic expectation. Group transactions, multiple trading entities, poor records or an unresponsive seller can extend that considerably.

The single biggest cause of delay is not the analysis. It is waiting for information. Where a seller is slow or disorganised, we tell you early rather than allowing the timetable to drift quietly.

On cost, we quote a fixed fee against an agreed scope wherever possible, so you know your exposure before we begin. Fees are driven by the depth of work required and the complexity of the business, not by a percentage of deal value. A focused review covering earnings quality, working capital, net debt and tax will cost materially less than a full-scope report covering commercial, operational and systems analysis.

We would rather scope the work honestly than sell you a report you do not need. If a limited review is proportionate to the risk, we will say so.

Quality of earnings analysis establishes what a business genuinely earns on a sustainable, repeatable basis. Since most private company deals are priced on a multiple of EBITDA, every pound of adjustment is multiplied several times over in the purchase price. It is usually the most valuable part of any financial due diligence exercise.

Reported profit and maintainable profit are rarely the same figure. Owner-managed businesses in particular often carry personal costs, above-market or below-market director remuneration, related party arrangements, property costs on non-commercial terms, or one-off items sitting in the wrong period. Some adjustments increase maintainable earnings and help the seller. Others reduce it.

We work through the profit and loss account line by line, testing each proposed adjustment against evidence rather than accepting a management schedule at face value. Where an adjustment cannot be supported, we say so and explain the reasoning.

The output is a bridge from statutory profit to adjusted EBITDA that both sides can interrogate. On a six-times multiple, a £150,000 adjustment moves the price by £900,000. That is why the detail is worth the effort.

Buy-side financial due diligence is commissioned by the purchaser or their funder. It protects the buyer, informs the price, and identifies risks that need to be covered through warranties, indemnities, retentions or completion adjustments. The report is addressed to you, and its findings feed directly into negotiation and the sale and purchase agreement.

Vendor due diligence is commissioned by the seller before a business goes to market. An independent adviser reviews the business as a buyer’s adviser would, and produces a report made available to interested parties. It works particularly well in competitive processes, because every bidder receives the same robust information and the finance team answers one detailed set of questions rather than four.

The strategic value of vendor due diligence lies in timing. Problems found six months before a sale can often be fixed, or at least explained properly. The same problems found by a buyer’s adviser mid-process become leverage, and leverage becomes a lower price or a larger retention.

Between the two sits exit readiness work: a lighter review, usually a year or more ahead of a sale, aimed at strengthening records, reporting and margins before anyone is invited to look.

A standard request list covers statutory accounts and management accounts for the last three years, the current year to date, the trial balance and nominal ledger, aged debtor and creditor listings, bank statements and reconciliations, payroll records, VAT and corporation tax returns, major customer and supplier contracts, lease agreements, loan documentation, and the forecast with its underlying assumptions.

Records are frequently less complete than either party expects. Management accounts may never have been reconciled to the year-end position. Revenue may be recognised on a cash basis in the internal reporting. Stock may not have been counted properly for years. Intercompany balances within a group may not agree.

None of this necessarily stops a deal, but it changes the work. Where records are weak, we rebuild what we can from primary evidence — bank statements, invoices, contracts — and we are explicit about what could not be verified and what that means for reliance.

An honest limitation is far more useful than a confident conclusion built on unreliable data. If we cannot get comfortable with an area, you will know precisely which area it is and why it matters.

Most financial due diligence exercises find something. Very few of those findings should end a deal outright. The purpose of the work is to give you options rather than simply to deliver bad news.

Findings usually lead to one of four outcomes. The price is adjusted, where the issue reduces maintainable earnings or increases net debt. The structure changes, through a retention, an earn-out, deferred consideration or a specific indemnity covering a quantified exposure. The completion mechanism is refined, particularly where working capital is more volatile than assumed. Or, occasionally, you walk away.

Walking away is a legitimate result and worth every pound spent on the review. A well-run process that prevents an expensive acquisition has done its job as effectively as one that supports a completion.

We quantify each issue wherever possible, because “the debtor book looks aggressive” is far less useful to your solicitor than “£240,000 of receivables are over 120 days old, against a bad debt provision of £15,000”. Findings that can be measured can be negotiated. We also work alongside your legal advisers so the risks we identify are properly reflected in the sale and purchase agreement.

Yes. Accendo is based at Bloomsbury Square in central London, and we support clients throughout the UK. We have acted for substantial clients well outside London, including businesses in Manchester and Derby. Data rooms, video meetings and remote access mean geography rarely dictates who is best placed to do the work, although we are always willing to attend management meetings in person where that adds value.

We are well suited to group structures, where consolidations, intercompany balances, multiple accounting systems and inconsistent policies between entities all need careful unpicking. Our audit practice covers group engagements, so this is familiar territory rather than unusual work.

We also act for charities and not-for-profit organisations, where transactions and mergers raise issues that mainstream corporate due diligence handles poorly: restricted and unrestricted fund analysis, reserves policies, grant conditions and clawback risk, income recognition, and trustee governance obligations. A charity merger needs a reviewer who understands the Charities SORP, not one applying a corporate template to an unfamiliar sector.

If you are unsure whether your transaction suits our practice, a short conversation will establish it quickly.

Earlier than most people do. On the buy side, the useful moment is once heads of terms are agreed in principle but before they are signed. Heads of terms often fix the price mechanism, the completion accounts basis and the exclusivity period — and those are far easier to shape before signature than to renegotiate afterwards. Early input also allows scope to be targeted at the areas that genuinely matter for that specific business.

On the sell side, twelve to eighteen months ahead of a planned exit is ideal. That window allows time to strengthen management reporting, clean up the balance sheet, resolve tax uncertainties, formalise informal customer arrangements and improve margins before anyone conducts diligence on you. Sellers who prepare properly tend to achieve better prices with fewer retentions and shorter processes.

Late instructions are still workable, and we regularly pick up urgent reviews against tight exclusivity deadlines. But compressed timetables limit what can be investigated and reduce the room to renegotiate on what is found.

Call 0207 523 5356 or book a consultation to discuss your transaction.

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What People are Saying

Don’t just take our word for it – hear from our satisfied clients who have experienced our exceptional service firsthand.

I would like to thank you for the exceptional services provided. The dedication and expertise displayed by the team have been nothing short of fantastic. Your assistance has been invaluable, and the quality of work delivered has consistently exceeded our expectations.

Carol
As a medium-sized company, we have found, Accendo, to be an invaluable partner in navigating the complexities of accounting, financial reporting, and tax compliance. The team at Accendo consistently demonstrates a high level of professionalism, efficiency, and expertise in their services. Their in-depth knowledge and understanding of our business have been instrumental in helping us manage our financial operations effectively. They have a unique ability to identify and address our specific needs, offering tailored solutions that add significant value to our business. Furthermore, we have been particularly impressed with their responsiveness and commitment to our success. Accendo has consistently gone above and beyond to ensure that we receive timely and accurate advice, enabling us to make well-informed decisions and maintain compliance with all relevant regulations. Their unwavering dedication to providing exceptional services has not only helped us achieve our financial goals but has also given us the confidence to pursue new growth opportunities. We wholeheartedly recommend Accendo to any business seeking a reliable and knowledgeable accounting partner.
Integrated Technology

We recruited Accendo to run our Audit this year, our accounts are complex and we have a huge amount of restricted projects running. Asif and his team were very approachable, professional and completed our audit to our tight deadlines. I highly recommend Accendo and we will be using them for future audits.

Rosie Wren

I have used Accendo as my company auditor for a few years now. Communication is always clear and helpful, I feel audited at the end of the process, in a positive way, and they keep to any agreed timetable. I definitely recommend them.

Wendy Courtenay

We have been working with ACCENDO for the past three years. As auditors of our business MPDFM, we found them to be a very professional audit firm.

Mohammad Bhatti