Understanding Financial Due Diligence (FDD)
Financial due diligence is the review and verification of financial information provided for the purpose of making a financial assessment of a target business, including but not limited to income, asset, debt, cash flow, loans as well as the internal control system of the target business.
The result of the financial appraisal is the Financial Appraisal Report, the contents of the financial appraisal report may include:
- Accounting policies;
- Revenue, expenses, profit;
- Cash flows;
- Situation of assets and capital sources up to the time of assessment;
- Tax Status and Risks;
- These are businesses that perform a financial due diligence before selling the business.
- The business buyer wants to perform a financial due diligence of the target business.
- Enterprises and organizations want financial appraisal before conducting mergers and consolidation.
Financial due diligence can provide additional information related to other issues (Other appraisal contents) during mergers and acquisitions, which may include the following aspects:
- Salary policy.
- Financial plans. Review past financial projections.
- Concerning Commercial Due Diligence (CDD).
Financial Due Diligence (FDD)
Reasons to choose us
+ Board of Directors, a team of auditors with many years of experience in auditing and consulting for Vietnamese and foreign-invested enterprises in Vietnam, performing audits for thousands of businesses with diverse industries. form.
+ Expertis always supports and advises enthusiastically and understands the business reality of customers. Create the best conditions for customers' convenience..
Expertis's financial due diligence services focus on service quality and building long-term relationships with Clients.
This allows us to understand all aspects of the business and the environment in which it operates, to ensure that the work is focused on the right nature and time, making it efficient and cost-competitive. best.
+ Accurately perform the work content as agreed in the contract.
+ Prepare reports, send reports as required and on time.
+ Cooperate with customers to find solutions to problems to ensure that the results of the audit report comply with the provisions of the law.
The financial appraisal process at Expertis is designed to be flexible and suitable for the specific industry of the business. The audit will be carried out according to the agreed time, meeting the requirements of the business as much as possible.
FAQ - Financial Due Diligence (FDD) FAQ
The time limit for carrying out the financial appraisal is normally about 15-30 working days from the date of completion of the financial statement as the basis for the assessment.
This time depends on the contract agreement and the time to multiply the verification results from the 3rd party.
The basic financial and tax objectives to be achieved are as follows. These goals are scalable according to the needs of the buyer/seller:
- Financial status and business performance of the target business?
- Have the financial statements of the target business been audited? And if so, for what period was it audited?
- Do the financial statements and financial notes adequately represent the liabilities of the target business?
- The situation of setting up provisions and handling provisions?
- Are the future financial projections and underlying assumptions reasonable and reliable?
- What basic working capital will be needed to continue operating the Business?
- What is the status of the properties and mortgages?
- Status of loans and repayments?
- What debts exist or are secured by the target business? What are its terms and when should it be refunded?
- Is there any unusual revenue?
- Is there a problem with accounts receivable?
- Tax status of the target business?
- Has the processing of Notices/Dispatch/Documents from Tax Administrations sent to Target Enterprises been completed or not?
- Tax status and payment status confirmations, tax arrears confirmations, tax refund decisions (if any)?
The “financial appraisal service fee is unreasonable” usually occurs in 2 cases:
+ Being unreasonable in the LOWER direction will reduce the quality of the assessment, and the assessment objectives may not be achieved.
+ Unreasonably in the HIGHER direction will lead to losses for businesses using the service.
Expertis charges a very reasonable fee for the appraisal service according to the expert's cost and the appraisal objective to be achieved. Please contact us using the form attached here for the details of your case.
It is common to use the Annual Financial Statements of the last 3 years showing what about the financial health and business performance of the company.
The number of years it takes to perform a financial due diligence also depends on the buyer's goals for the target business. However, if the number of appraisal years is less than 3 years, then the problem of trend analysis will not be feasible.
No, financial due diligence indicates the accuracy and reliability of financial data.
However, based on the appraised financial data, we support the valuation by the asset method.
Yes, the financial due diligence report shows the liabilities and possibly the client's confirmation in case this is the target to be achieved. Note that the waiting time to receive confirmation from the customer may not be suitable for the appraisal plan because usually the customer replies are always later than the time required for the appraisal.