Financial due diligence for South African business deals.
A deep read of earnings quality — what the numbers genuinely support, and what they are quietly leaving out.
Free basic valuation returned within 24 hours. Formal engagements scoped and fixed-fee quoted up front.
Midpoint R9.8m · Manufacturing · R24m turnover
Price is set by earnings quality, not by turnover.
Careful analysis is the key input in determining price — for the buyer and the seller alike.
Negotiate the right number
By establishing the true quality of earnings, a buyer can argue a fair purchase price and a seller can justify the one they are asking. Both positions get stronger when the analysis is credible.
No surprises after closing
Investigating hidden liabilities and operational issues prevents the unpleasant discoveries that turn a good deal into a dispute six months later.
Decisions others can sign off
Clear, objective findings let investors, lenders and boards commit with certainty, rather than approving a transaction on the strength of the seller's own summary.
Four things we take apart.
Every review covers these. Where the business or the deal demands more, the scope is agreed up front.
Quality of earnings
We normalise earnings by adjusting for non-recurring items, owner remuneration and accounting policy choices, to arrive at a defensible view of sustainable profitability. This is the number the price is built on, and it is rarely the one in the income statement.
Working capital and cash flow
Analysis of cash conversion and working capital cycles establishes whether there is enough liquidity to run the business after the transaction — and how much cash the buyer will need on day one, which is a frequent late-stage shock.
Tax and regulatory compliance
We review tax filings, contingent liabilities and regulatory obligations to identify exposure. Unresolved SARS matters and informal employment arrangements are the two that most often move a price.
Off-balance-sheet obligations
Lease commitments, guarantees, restraint undertakings and related-party transactions are investigated. What is not in the balance sheet is regularly worth more than what is.
A clean audit tells you the books are right. It does not tell you the earnings are repeatable.Pravata
Four stages, scoped before we start.
The scope is agreed in writing at stage one, so the fee is fixed and the deliverable is known.
Planning and scoping
We work through your objectives, the transaction structure and your specific concerns. A minority investment and an outright acquisition demand different depth in different places.
Data analysis
Financial statements, management accounts, contracts and projections are examined and cross-referenced against market data to test whether the assumptions hold.
Interviews and verification
Management and key personnel are interviewed to validate the explanations behind the numbers and to surface operational issues that never reach the accounts.
Reporting
Findings are set out concisely: risks, opportunities and recommended adjustments, with sensitivity analyses showing how different assumptions move the value.
What lands in the report.
Written to be read by a principal, not filed by an advisor.
Quality of earnings summary
Reported profit reconciled to sustainable earnings, with every adjustment itemised and explained.
Normalised EBITDA bridge
A step-by-step walk from the stated figure to the defensible one, in a form a buyer's accountant can follow.
Working capital analysis
The normal cycle, the peak requirement, and the target working capital the deal should be priced against.
Red-flag register
Every material issue found, rated by severity, with the commercial consequence spelled out.
Tax and compliance exposure
Outstanding filings, contingent liabilities and regulatory gaps, with likely quantum where it can be estimated.
Recommended adjustments
The specific price, warranty or indemnity changes the findings support — not just the problems, but what to do about them.
Both sides of the table.
Buyers
Establish what you are actually acquiring before the exclusivity period and the legal spend make walking away expensive.
Sellers
Run the review on yourself first. Issues you disclose and explain cost far less than issues a buyer discovers.
Lenders and investors
Independent verification of the numbers a management team has presented, in a form a credit committee can act on.
Questions we're asked most.
What is financial due diligence, in plain terms?
It is a deep read of a business's numbers to establish what its earnings genuinely are and what risks sit behind them. It goes well past checking that the statements add up: the point is to work out which profits are repeatable, which are once-off, and what a buyer would actually inherit.
How is due diligence different to an audit?
An audit asks whether the financial statements fairly present the past according to accounting standards. Due diligence asks a forward-looking commercial question — what are sustainable earnings, and what could go wrong after the deal closes. A clean audit opinion and a poor due diligence outcome regularly sit side by side.
How long does a due diligence review take?
Most SME reviews run three to five weeks from receipt of a complete data pack. The variable is rarely our side — it is how quickly management accounts, contracts and tax records are made available, and how well they were kept.
Can you do due diligence for a seller rather than a buyer?
Yes. Sell-side due diligence surfaces the issues a buyer will find before they find them, which lets you fix or explain them on your own terms rather than under price pressure at the eleventh hour.
Do you work outside the Western Cape?
Yes. We act on mandates in Cape Town, Pretoria, Durban, Johannesburg and nationally. Document review runs remotely and management interviews are held by video call, or on site where the transaction warrants it.
An indicative range, back within 24 hours.
Give us your sector, last year's turnover and your rough operating profit. We'll come back with a range and the assumptions we used to get there.
- A range, not a single number — with the workings
- Read by a person before it reaches you
- No obligation and no third-party sharing