Financial due diligence is an exercise carried out on behalf of a prospective purchaser in a negotiated bid in order to confirm the accuracy of the information and assumptions on which the bid is based.

A due diligence report will provide the purchaser and his finance providers with an independent assessment of the business and will highlight and quantify areas of commercial and financial risk.

It will also assist finance providers to identify worthwhile investment opportunities - and highlight those where caution should be exercised.

A due diligence report will address:

• the dynamics of the business - including critical success criteria, key performance indicators, industry trends and any seasonal implications which may affect the business
• management issues
• taxation risks and opportunities.

It will also comment on the quality of the financial and management information, the proposed structure of the investment and the company's ability to service its terms.

Commercial due diligence is usually carried out by the purchasers themselves as part of the process of getting to know the business. The financial due diligence would be carried out by a firm like Barnes Roffe.

The financial due diligence process is a necessity to any transaction and is one in which Barnes Roffe Corporate Finance has a long and established track record.