Financial Due Diligence in Mergers & Acquisitions

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Overview

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M&A Financial Due Diligence is a comprehensive analytical process designed to assess the accuracy, transparency and sustainability of a target company’s financial position.

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The objective of Financial Due Diligence goes beyond verifying accounting figures. It enables investors to understand the quality of earnings, the sustainability of cash flows, working capital dynamics, capital structure, and financial risks that may directly impact valuation and transaction structuring.

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At W&A Consulting, we approach Financial Due Diligence from a transaction-driven perspective. Our focus is on identifying issues that materially affect deal value, pricing adjustments, completion mechanisms, and post-acquisition financial performance.

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Scope of Services

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1. Quality of Earnings Analysis

• Assessment of sustainability of reported earnings

• Identification and adjustment of non-recurring income or expenses

• Normalization of EBITDA

• Review of accounting policies impacting profitability

We help investors determine the “true earnings capacity” of the target business to support an accurate valuation.

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2. Revenue and Margin Analysis

• Revenue breakdown by product, customer, and market

• Analysis of customer concentration risk

• Gross margin trends and volatility review

• Evaluation of pricing sustainability

This analysis allows investors to assess the long-term value generation potential of the business.

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3. Working Capital and Cash Flow Review

• Determination of normalized working capital levels

• Analysis of receivables, payables, and inventory cycles

• Identification of aged receivables or slow-moving inventory

• Review of operating cash flow performance

Working capital analysis is critical in determining completion accounts mechanisms and purchase price adjustments.

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4. Asset and Liability Assessment

• Review of fixed assets and intangible assets

• Analysis of debt obligations and financing arrangements

• Identification of off-balance sheet commitments

• Assessment of contingent liabilities and guarantees

We ensure investors have full visibility over the company’s actual financial obligations.

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5. Capital Structure and Financing Review

• Analysis of leverage ratios

• Evaluation of debt service capacity

• Assessment of refinancing or restructuring needs post-transaction

• Capital optimization considerations

This supports strategic decisions regarding transaction financing and post-deal financial restructuring.

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6. Internal Controls and Financial Reporting Assessment

• Evaluation of accounting systems and reporting reliability

• Review of internal control environment

• Identification of weaknesses in financial governance

• Assessment of fraud or material misstatement risks

Understanding the financial governance framework enables investors to anticipate post-acquisition integration costs and improvements.

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Methodology

W&A applies a structured, data-driven and commercially focused methodology:

• Multi-year financial trend analysis

• Detailed reconciliation between management accounts and statutory reports

• Interviews with management and finance teams

• Development of normalized EBITDA and working capital models

• Quantification of valuation-impacting adjustments

Our reports are designed to support investment committees, legal advisors, and transaction negotiators.

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Deliverables

• Comprehensive Financial Due Diligence Report

• Quality of Earnings Report

• Normalized EBITDA Analysis

• Normalized Working Capital Calculation

• Financial Risk Summary Matrix

• Recommendations for pricing mechanisms and payment structuring

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Why W&A

• Integrated financial, tax and legal perspective

• Deep understanding of Vietnamese business practices and FDI structures

• Transaction-oriented analysis focused on valuation impact

• Direct negotiation support during deal execution

• Experience across manufacturing, logistics, technology, retail, and cross-border businesses

We do not simply validate numbers. We help investors understand the economic substance behind the numbers and protect deal value.