Transaction Support
Buying or selling a business exposes everything that was never cleaned up. Due diligence is not an audit and it is not looking for fraud; it is establishing what you are actually acquiring and whether the earnings you are paying a multiple of are the earnings the business will keep producing. Most value is won or lost in that distinction.
1
Scope
What matters to this deal
2
Analyse
Quality of earnings
3
Verify
Balances and liabilities
4
Report
Findings that price
5
Support
Through to completion
How We Support the Deal
01
Scoping the Review
Due diligence can expand indefinitely and rarely justifies it. We scope against what could actually change the price or kill the deal, rather than examining everything to an equal depth.
- Scope agreed against deal value and risk
- Materiality set for the transaction, not for an audit
- Areas capable of changing the price prioritised
- Deal breakers identified early rather than at the end
02
Quality of Earnings
The central question: how much of the reported profit is sustainable and repeatable. Owner remuneration, related party dealings, one off items and accounting policy choices all distort it in predictable directions.
- Reported earnings adjusted to a normalised basis
- One off and non recurring items identified
- Owner remuneration and related party transactions normalised
- Accounting policy choices assessed for aggressiveness
03
Balance Sheet and Liabilities
What is actually owned and owed, including what is not on the balance sheet. Undisclosed liabilities and overstated debtors are the two findings that most often move a price.
- Debtor recoverability and ageing tested
- Stock existence, valuation and obsolescence
- Undisclosed and contingent liabilities investigated
- Working capital normalised for the completion mechanism
04
Reporting
Findings written so they can be used in a negotiation. A finding that cannot be quantified cannot be argued, so each issue is expressed in a rand impact wherever the evidence supports one.
- Findings quantified in rand terms
- Price impact separated from post completion risk
- Matters for warranty or indemnity identified
- Report structured for use in negotiation
05
Completion and Integration
Support through the completion mechanism and into the first months afterwards, where the working capital adjustment and the integration of finance functions both routinely go wrong.
- Completion accounts and working capital adjustment
- Input on warranties and indemnities alongside legal advisors
- Opening balance sheet establishment
- Finance function integration after completion
What You Receive
- Scope agreed against deal value and risk
- Quality of earnings analysis with normalisation adjustments
- Balance sheet and liability findings
- Findings quantified in rand terms for negotiation
- Input on warranties and indemnities with your legal advisors
- Support through completion accounts and integration
Indicative Timeline
Focused due diligence on a small to medium business takes three to five weeks. Data room quality is the dominant variable, and sell side preparation is a longer exercise usually started months before going to market.
- Scoping and information request: three to five days
- Analysis and verification: two to three weeks
- Reporting: within a week of fieldwork
- Completion and integration support: as the deal requires
Where We Add Value
Transaction work concentrates on what changes the price and what you inherit afterwards.
Quality of Earnings
Distinguishing sustainable profit from what a seller has presented as profit.
Working Capital
The normalised level, which determines the completion adjustment and is routinely disputed.
Hidden Liabilities
Undisclosed obligations, contingencies and commitments not visible on the balance sheet.
Tax Exposure
Historical positions the buyer would inherit, and how to structure around them.
Sell Side Preparation
Cleaning up before going to market, because buyers discount uncertainty heavily.
Integration
The first ninety days, where finance function integration is usually underestimated.
Frequently Asked Questions
Is due diligence the same as an audit?
No. An audit expresses an opinion on whether statements are fairly stated. Due diligence establishes what a buyer is acquiring, focusing on sustainable earnings, hidden liabilities and the working capital position. Different questions, different work.
What is quality of earnings?
How much reported profit is genuinely sustainable. Below market owner salaries, related party rent, one off gains and aggressive revenue recognition all inflate reported earnings, and adjusting for them frequently changes the valuation materially.
Should we do due diligence on a small acquisition?
Scaled to the deal, yes. Even a focused two week review usually pays for itself, because the findings either reduce the price or reveal something that should have stopped the transaction.
Can you help us prepare to sell?
Yes, and starting early matters. Buyers discount uncertainty aggressively, so clean records, resolved related party arrangements and a defensible earnings history are worth considerably more than the cost of preparing them.
Do you handle the legal side?
No. We work alongside your attorneys, providing the financial findings that inform warranties, indemnities and the completion mechanism. Legal drafting and advice sit with them.
What happens after the deal closes?
The completion adjustment gets calculated and frequently disputed, and the finance functions have to be integrated. Both are routinely underestimated, and support through the first ninety days is usually worth arranging up front.
Related Services
This sits inside our Business Advisory practice. Related work: Tax Planning and Structuring for the structure the deal is done through, and Financial Modelling and Feasibility for the valuation model behind the price.
