Financial due diligence costs in the UK depend on the work needed to answer the buyer’s questions, rather than the purchase price alone. The number of entities, quality of the accounts, areas being investigated, access to management, report requirements and timetable all affect the fee.
If you are buying a business, the useful question is: what will this proposal help me decide, and what will remain unexamined? Two quotations can look similar while covering very different work.
What determines financial due diligence fees?
ICAEW’s financial due diligence guideline explains that the deal hypothesis, concerns, available information and timetable influence scope. The practical fee consequence is that a small but poorly documented target can require more investigation than a larger, well-organised business.
| Factor | What can increase the work | What to prepare |
|---|---|---|
| Business structure | Several entities, currencies, intercompany balances or carve-out allocations. | Group structure and the exact transaction perimeter. |
| Financial information | Unreconciled monthly accounts, missing schedules or changing versions. | Accounts, management reporting and an explanation of gaps. |
| Earnings and revenue | Owner adjustments, project estimates, customer concentration or complex recognition. | Revenue detail, contracts and evidence for proposed adjustments. |
| Cash and completion matters | Seasonality, stock, deferred income and disputed debt-like items. | Monthly working capital and debt schedules, with definitions. |
| Output and recipients | Detailed reporting, lender requirements or separately agreed reliance. | Who needs the report and the decision each person must make. |
| Timing and follow-up | Compressed access, repeated data replacements or extended negotiations. | Decision dates, management availability and expected Q&A rounds. |
A scope example: same acquisition, different instructions
Imagine a buyer acquiring a single UK trading company. The accounts show attractive EBITDA, but the buyer is concerned about one large customer and unusual owner adjustments. These are fictional instructions, not a client case study or a fee quotation.
Targeted first stage
Investigate the specified customer exposure and EBITDA adjustments using agreed records. Report findings, missing evidence and unanswered questions.
Broader financial review
Add the agreed historical performance, revenue and margin, working capital, net debt, cash conversion and forecast workstreams.
Transaction follow-up
Discuss findings with advisers and review selected updated schedules or completion definitions, where specifically included.
The first instruction may be useful for an initial decision, but it does not provide the coverage of the second. The third is additional work unless the proposal includes it. A short report can still require substantial analysis; a long report does not prove that the important questions were answered.
Read our red-flag review versus full financial due diligence comparison before choosing a narrower instruction solely to reduce the initial fee.
Fixed fee, time-based fee or staged engagement?
A fixed fee works best when the target, information, outputs and boundaries are sufficiently clear. Check whether it includes meetings, draft findings, management Q&A and an agreed amount of follow-up. A fixed price is not automatically an unlimited instruction.
A time-based engagement should explain rates, estimated effort, reporting of fees and approval thresholds. A staged engagement can separate an initial review from deeper investigation, with a decision point before further expenditure. Agree whether earlier analysis can be reused rather than paying twice for the same work.
Ask whether the quoted amount includes VAT, expenses, specialist input and reliance arrangements. If the transaction stops, establish what fees remain payable for completed work and reserved time under the engagement terms.
Compare quotations on the work, not just the total
- Match the perimeter. Are the same entities, review periods and transaction structure covered?
- Match the questions. Do both proposals investigate earnings, cash and completion exposures at the depth you need?
- Match the evidence. Is the adviser analysing underlying records or only summarising management’s presentation?
- Match the output. Will you receive findings, supporting schedules, limitations and a discussion of implications?
- Match the users. Can the buyer, lender or investor use or rely on the output under the agreed terms?
- Match the follow-up. What happens when new information or a material issue appears?
What is normally separate from financial due diligence?
Legal, tax, commercial, technology, cyber and operational reviews are separate workstreams unless expressly included. Financial due diligence is also distinct from an audit, a formal valuation opinion and negotiating the sale agreement. Coordinate responsibility so an important question does not fall between advisers.
A narrow fee should not be presented as comprehensive protection. No review guarantees that every issue will be found or that an acquisition will succeed. The report should distinguish tested evidence from information that was unavailable or outside scope.
What to send for a useful initial estimate
Start with the sector, approximate size, number of entities, deal stage, proposed structure, deadline and main concerns. Describe the records available and who needs the output. You can use our buyer’s financial document request guide to identify likely records.
Keep confidential accounts and customer information out of an initial public enquiry. Agree an appropriate sharing process after the brief is established.
Frequently asked questions
How much does financial due diligence cost in the UK?
There is no single fee suitable for every acquisition. Obtain a scoped proposal covering the target, review periods, workstreams, information quality, output, recipients and deadline. Consult EFC agrees scope and fee before work starts.
Is the fee calculated as a percentage of the purchase price?
Purchase price provides context, but it does not describe the work required. Complexity, data quality, scope, access and reporting requirements are more useful inputs for comparing financial due diligence proposals.
Does a fixed fee include unlimited follow-up?
Only if the engagement expressly says so. Confirm the meetings, Q&A rounds, updated schedules and transaction support included, and how additional work will be approved.
Will a red-flag review cost less than a broader review?
A narrower instruction may require less work, but its coverage is different. Compare the actual scope, evidence and output. A lower initial fee can leave important areas unexamined.
Can the lender rely on the report?
Reliance is not automatic. Intended users, permitted use and any separate reliance arrangements must be agreed with the adviser and lender.
Not sure where your business stands right now?
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Over 12 years across Big Four audit, Investment Banking, and corporate advisory. Kish works with SaaS founders, tech companies, and ambitious UK SMEs from £1M to £50M in revenue on fundraising, valuations, exit planning, and financial strategy. ICAEW regulated. Big Four trained. Based in London.