The discipline behind independence, evidence, and knowing exactly where our job ends
Someone building a genuine acquisitions strategy asked me recently how we actually work, before deciding whether to bring us onto a large upcoming deal. It is a fair question, and one worth answering properly, because the answer has far less to do with what a report costs and far more to do with the discipline behind how it gets built.
The first and most important thing is that we stay firmly in our lane. Financial due diligence is our job, and nothing more. Wording the share purchase agreement, sitting in on legal calls, forming a view on how the final price should be adjusted after completion, that belongs to the solicitor, not to us. Plenty of firms in this space like to be present for all of it anyway, offering opinions on legal points they have no authority or insurance to give. If that opinion later shapes the agreement and something goes wrong, they are not covered for it, because it was never theirs to decide in the first place. We would rather do our own job properly than dabble in someone else’s and leave a client exposed.
The second thing is independence, which means keeping our distance from the seller throughout. We work through the buyer and the solicitors, never directly with the people selling the business. Everything arrives through a data room, a secure folder where every document gets uploaded, alongside a formal due diligence questionnaire that the seller or their accountant completes. Any follow up questions go in writing, and we ask for written answers in return. That is not awkwardness on our part. It means that if anything is disputed later, there is a paper trail rather than a memory of what someone said on a call. A report built on documents and figures cannot be talked round by a good story, and that is exactly the point of it.
That discipline is also why a typical report from us runs to around 40 pages and covers roughly 25 separate areas of a business. It is a genuinely thorough process, built entirely from what the evidence shows rather than from what anyone in the room happens to believe.
The third thing is the order the work gets done in. We weight everything towards risk, looking first at the parts of a business most likely to sink a deal rather than leaving them until last. If something serious enough to end a deal is sitting in the numbers, we want our client to know within the first few weeks, not after months of work, a growing sense of momentum, and a seller relationship that has quietly become harder to walk away from.
Plenty of firms work through everything in a comfortable, predictable order instead, clearing the straightforward ground that was never going to be a problem before they finally reach the one issue that actually matters. By the time it surfaces, everyone involved, buyer, seller, and advisors alike, has more invested in making the deal work than in seeing it clearly. That is precisely the position we try to keep our clients out of.
None of this means we soften what we find. If there is a risk, we say so plainly, with a number attached. A while ago, on one acquisition, we picked up an old research and development tax claim on the target company. HMRC, the UK tax authority, have been reopening enquiries into claims like this made as long as eight years earlier, so we made sure the clause protecting against future tax problems, often called a tax covenant, covered every research and development claim the company had ever made, not just the usual time limit. A finding like that rarely stops a deal on its own. It simply tells the solicitor exactly what to protect their client against, and leaves the buyer to decide, with full information, whether they are comfortable carrying that risk.
We could put the same deal in front of three different buyers and get three different answers, because risk appetite is personal, in much the same way that some people are quite happy jumping out of a plane and others think it is a terrible idea. Our job is to make sure a buyer knows exactly what they are taking on before they sign, not to make that decision on their behalf.
It is also why a number of lenders now accept our reports without insisting on their own additional due diligence on top. They have seen enough of our work over time to trust the standard it is done to, and that trust is built entirely on the process, not on anything we say about ourselves.
If you are ever choosing between due diligence providers, the questions worth asking are not about qualifications or how many pages a report runs to. Ask how close they get to the seller during the process. Ask how they sequence their work, and whether they would tell you about a fatal problem in week one or leave it until the end. Ask whether their findings come with clear recommendations for your solicitor or just a pile of observations. The answers will tell you far more than any pitch ever will.
If you are in the middle of an acquisition and want a clear headed pair of eyes on the numbers before you sign anything, get in touch.
Johann