Financial & Tax Due Diligence

Due Diligence is a much dreaded yet crucial step of any major fundraising or exit transactions, where both parties dive deep into the target’s financial statements, reports and management accounts from at least the last three years – often much longer.

Providing your investors with accurate, insightful and tidy financial records and showing your full compliance with all relevant tax legislation is key in establishing mutual trust and ensure that the fundraising or sale process goes as smoothly as possible. If you are approaching a sale, those same records also need to constitute the starting point for future financial decision-making.

In addition, key data that can be found and verified through financial reports will be the basis upon which the parties will calculate a fair valuation that they all can agree on.

Our Financial & Tax Due Diligence service goes beyond basic financial analysis, focusing on the unique needs of fast-growing companies. We provide comprehensive reviews of financial and tax history, relative to the company’s stage and size, as well as the transaction which it is approaching.

Our highly experienced advisors also emphasise areas that could be hiding potential drawbacks, both from a tax liability and from a valuation perspective, as well as provide recommendation on how to address these concerns.

Our Due Diligence Package

We regularly work with major Series A and B investors, and our Financial and Tax due diligence package includes a comprehensive review on:

• Profit & Loss
• Balance sheet
• Cash flow and finance function 
• Valuations
• Financial modelling
• Tax & accounting warranty review

Why Due Diligence Matters

Whichever side of a deal you are on, you’ll want to make sure you have a clear view of all the relevant information. No one likes a surprise when they’re going through financial records and reports. Whether you are a Founder approaching a Funding Round or an Exit, or an investor looking to assess a new potential opportunity, you’ll want to make sure that any potential risks are accounted for ahead of time.

For Founders

When you are preparing for a major transaction such as an Exit, or a late stage funding round, your investors will want to make sure that your finances are in order. That’s not normally a problem if you followed the best accounting and tax practices all the way through your company’s lifetime.

However, even when your accounts are seemingly spotless, a deeper analysis can sometimes reveal unforeseen miscalculations, incorrect assumptions, or simply a deeper level of data which has a major impact on your revenue projections or your next tax bill.

All of these can take a significant toll on your company’s valuation, which is not something you’d want to take you by surprise as you walk into a deal. Many of these pitfalls can be avoided or corrected if identified ahead of time, and that’s why our Due Diligence package comes in.

For Investors

If the above holds true for Founders, it does even more for potential investors and acquirers, who are getting their first and only glance at a company’s financial history when they look into their accounts.

Having a trusted partner who understands the intricacies of financial reporting, and knows where to find the needle in the haystack when it comes to revenue recognition and quality, potential tax liabilities, revenue projections and profit margin calculations, provides you with the security you need, so you can focus on reaching an advantageous agreement knowing that you have the best and most accurate information available from day one.

How We Work

Financial and tax due diligence is a complex process that requires in-depth knowledge from senior experts. Finerva is proud to have advisors with long-lasting expertise in both areas and we’re able to produce both, tax and financial due diligence reports in one seamless process. 

Our reports usually take between 3 weeks and 3 months to be completed, during which we will be in contact with both parties of the transactions to ensure we use the latest and most accurate data at all times. At the end, we will provide our full assessment, as well as thorough feedback on any potential areas that may need attention.