Maintainable EBITDA is rarely the EBITDA in the information memorandum
These are the financial issues we uncover most often once we get past the headline P&L and into the general ledger.
EBITDA add-backs that do not stand up
Owner salary normalisation, one-off costs, and "non-recurring" items that recur every year. Without a proper quality of earnings review, you are pricing the deal off a number that does not reflect the business you will actually own.
Working capital flattered before completion
Stock that does not move, debtors that will never be collected, creditors stretched to improve the cash position right before signing. The working capital target in your SPA needs to reflect reality, not a number chosen to make the deal look clean.
Net debt is not what the balance sheet says
Finance leases reclassified as operating costs, deferred consideration from a prior acquisition, or a Bounce Back Loan still sitting on the books. Net debt has to be reconstructed line by line, not taken from the statutory accounts at face value.
Revenue concentration hidden by aggregation
Two or three customers driving the majority of revenue, contracts that are not actually committed, or churn that is improving on paper because the worst accounts already left. The headline growth chart rarely shows this on its own.
Cash flow does not match reported profit
A business can show consistent profit on the P&L while burning cash, if revenue recognition is aggressive, capex is understated, or receivables are growing faster than sales. Cash conversion is one of the clearest tells of earnings quality.
A light-touch review keeps the deal moving, not you protected
Plenty of accountants will sign off a quick review to keep the relationship friendly and the timetable short. We are engaged to find problems, not avoid them, because a missed issue costs you long after we have moved on to the next engagement.
What our financial due diligence reviews cover
A structured review of the target's financial position, built to give you a negotiating position, not just a binder of findings.
Quality of Earnings (QoE)
We rebuild EBITDA from the general ledger, strip out one-offs and owner add-backs, and test whether reported profit is genuinely sustainable. This is the single most important number in the deal, and we make sure it is real.
Working Capital & Net Debt
We build a normalised working capital target and a true net debt schedule, so the completion mechanism in your SPA is based on evidence rather than the seller's preferred presentation of the balance sheet.
The working capital target set in the SPA directly moves your completion payment, pound for pound.
Revenue & Customer Quality
Customer concentration, contract terms, churn, and pipeline conversion analysed against the historic numbers. Particularly important for SaaS and subscription businesses where reported MRR rarely matches collected cash.
Found two customers representing 41% of reported revenue on a SaaS target marketed as "diversified", which directly informed a £400k price adjustment.
Cash Flow & Cash Conversion
We test whether reported profit converts to cash, and build a rolling cash flow view to flag liquidity risk that the P&L alone will never show you. A profitable business can still run out of cash.
Internal Controls & Red Flags
We assess the control environment around revenue, cash, and payroll, and flag anything that suggests poor governance or, in rare cases, deliberate misstatement. Most issues are simple to explain. Some are not.
Findings Report & SPA Support
A clear, prioritised findings report you can hand to your solicitor and use directly in negotiation. We work alongside your legal team to translate findings into price adjustments and completion mechanics, not just a list of observations.
Proper financial due diligence vs. your other options
On a deal under roughly £20M, most buyers choose between three approaches. Here is what each one actually delivers.
| Capability | Consult EFC Financial DD |
No DD Trust & hope |
Big Four Firm £50k–£150k+ |
|---|---|---|---|
| Quality of earnings & EBITDA bridge | ✕ | ||
| Working capital target & net debt schedule | ✕ | ||
| Founder & partner-level attention throughout | ✕ | ✕ | |
| Fixed fee, agreed before work starts | ✕ | ✕ | |
| Right-sized for an SME or SaaS transaction | ✕ | ||
| Report you can use directly in negotiation | ✕ |
We typically work with buyers who look like this
We are selective about engagements because financial due diligence only protects you when it is done properly and fast enough to keep your deal timetable on track.
Acquiring an SME or SaaS business
You have agreed heads of terms on a target typically valued between £500k and £30M and need an independent financial review before you commit capital and sign warranties you cannot take back.
Private equity, family office or angel investor
You are deploying capital into a single platform deal or follow-on investment and need a credible, independent view of the financials without the cost or timetable of a Big Four engagement.
Lender assessing a borrower or security
You are extending debt finance against a business and need confidence in the underlying earnings and cash generation before the facility is approved.
Management team running an MBO
You know the business operationally but need an independent financial review to support your funder and justify the valuation as you take on the financing.
Need the tax side covered too? See our combined financial and tax due diligence service.
From data room access to a report you can act on
Most engagements run two to four weeks. We move at the pace your transaction timetable demands.
Scoping call, free, 30 minutes
We talk through the target, the deal structure, your timetable, and where the real risk is likely to sit. You get a clear scope and fixed fee before anything is agreed.
Data room request & review, week one
We issue a tailored information request, work through management accounts and the general ledger, and flag early questions for the seller's adviser while there is still time to chase answers.
Analysis & QoE build, weeks two to three
We build the EBITDA bridge, working capital target, and net debt schedule, with regular updates so you are never waiting until the final report to hear about a problem.
Findings report & negotiation support
You receive a prioritised written report, a verbal walkthrough of every material finding, and direct input alongside your solicitor on price adjustments and completion mechanics.
Free · No obligation · Available within 48 hours
Common questions
What is financial due diligence?
What is the difference between financial due diligence and an audit?
What is quality of earnings (QoE) and why does it matter?
How long does financial due diligence take?
What size of transaction do you typically work on?
Do you cover tax exposure as well as the financials?
What happens if you find a serious issue?
How quickly can you start?
Tell us about the deal. We will tell you the scope and the fixed fee.
No generic packages and no hourly billing surprises. Share the basics of the target and your timetable, and Kish will respond personally with a clear scope of work and a fixed fee, usually within 48 hours.
Confidential · No obligation · Usually a response within 48 hours
Related reading on earnings & deal risk
Quality of Earnings 2026: Buyer Tests, Red Flags, Fixes
A practical guide to how a QoE review actually works, the questions buyers ask, and how to fix issues before they cost you money.
SaaS Due Diligence Red Flags That Cut Valuation
The recurring issues that erode price in SaaS transactions, from messy MRR data to weak retention evidence.
Need tax exposure covered too? See our combined service
Financial and tax due diligence in a single engagement, for deals where corporation tax, VAT and PAYE exposure also need reviewing.