Preparing for Financial Due Diligence

Buyers, investors and diligence teams all want a quick, efficient and effective financial due diligence process. No waffle. In that spirit, here’s our quick tips for target companies for good diligence preparation and some hints to avoid common pitfalls.

Collate the basics. Even before a DD team gets in touch, you can and should have “the basics” ready. These include 3 years of management accounts, up to date Balance Sheet reconciliations and of course, your forecast.

Don’t fall in the trap of: thinking “we’ve already got that”. You may have the information, but it’s likely scattered around the business or finance team. Rule of thumb: until there’s a document in the diligence folder, you’ve not “got it”.


Kick off Well. A good 15 minute presentation to the DD team on day 1 helps you set the scene. Have slides showing your product/service mix, organisation chart, group structure and key personnel.

Don’t fall in the trap of: launching straight into the financials. The numbers are the outputs of the business – let the DD team get to know you, what you do and why your business is an attractive proposition first. Set the scene well.


Keep the ball in the diligence team’s court. Make sure to answer their initial information request promptly; the more the team can learn before meeting you the quicker the process should be. Their questions will be sharper, closer to the issues and hopefully you’ll get fewer.

Don’t fall in the trap of: thinking work finishes at 5pm. Sure, it might do for you, but chances are it doesn’t for your DD team who are on a tight deadline. Rule of thumb: Don’t put their requests off to tomorrow morning, or worse, Monday!


Stand in the other man’s shoes each time you prepare information. Second guess the diligence team – if it’s a question you’d ask, they’ll probably ask it too. Make sure you’ve got the answers and evidence needed to satisfy the questions you know will come.

Don’t fall in the trap of: thinking their information request list is all you need to provide. The information list gives the team the foundation upon which to ask questions and seek more evidence. Rule of thumb: have the evidence to hand (common items include big-value invoices, important legal agreements, recent correspondence with prospective customers)


Few businesses are a one-man band. DD teams need to understand and believe the prospects you’re selling. A great way to prepare is to involve others in the business in the DD process. The Finance Director, whilst very important in the process, isn’t really who the team want to hear from all the time.

Don’t fall in the trap of: keeping the DD team away from the business’s operations – if your deal isn’t secret, encourage the team to watch and meet people who are passionate about what you do. Rule of Thumb: lunch-time is actually a great chance for the DD team to meet people in the business. Get a few people around the boardroom table and pick something interesting about the business to chat over lunch. Diligence teams always appreciate a nice lunch!


5 top tips and 5 things to avoid. Preparing for DD can require a lot of time and effort especially if the process is new to you. It’s not merely a formality and deals often abort at this stage, so it merits the same focus as any other stage of the deal process.

Should you need help in preparing for diligence being carried out on your business, Craig Corporate have huge experience of the process from both sides.   


Paul Bready
About the author

Paul joined Craig Corporate in 2016 and has been involved in various diligence, fund raising and financial modelling assignments. Paul qualified as a Chartered Accountant (ICAS)...
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by Paul Bready