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.
Every engagement scoped and fixed-fee quoted up front, after an initial consultation at no charge.
Midpoint R9.8m · Manufacturing · R24m turnover
Price is set by earnings quality, not by turnover.
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.
No surprises after closing
A thorough review of the business helps identify material financial, legal and operational matters before completion, giving all parties greater certainty and reducing the risk of post-transaction disputes.
Decisions others can sign off
Clear, objective findings let investors, lenders and boards commit with certainty.
Four things we take apart.
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.
Working capital and cash flow
Analysis of cash conversion and working capital cycles establishes how much cash the buyer will need on day one — a frequent late-stage shock.
Tax and regulatory compliance
We review tax filings, contingent liabilities and regulatory obligations to identify exposure.
Off-balance-sheet obligations
Lease commitments, guarantees, restraint undertakings and related-party transactions are investigated.
A clean review confirms the financial records. It does not, on its own, assess the sustainability of future earnings.Pravata
Four stages, scoped before we start.
Planning and scoping
We begin by understanding your objectives, the nature of the engagement and any matters requiring particular attention.
Data analysis
Financial statements, management accounts, contracts and other relevant information are analysed and considered alongside appropriate market data.
Interviews and verification
Management and key personnel are consulted where appropriate to verify information and obtain a broader understanding of the business.
Reporting
Our findings are presented clearly, highlighting key observations, areas requiring attention and practical recommendations.
What lands in the report.
Quality of earnings summary
An assessment of reported earnings together with adjustments that may be appropriate in determining sustainable operating performance.
Normalised EBITDA bridge
A reconciliation from reported EBITDA to a normalised measure, with each adjustment clearly explained.
Working capital analysis
An analysis of historical working capital requirements and the level of working capital appropriate to the circumstances.
Key findings register
Material financial and operational matters identified during the review, together with their potential commercial implications.
Tax and compliance exposure
Relevant tax, regulatory and compliance matters identified during the engagement, together with their potential impact where reasonably quantifiable.
Recommended adjustments
Practical recommendations arising from the findings, together with their potential implications for the transaction or business.
Both sides of the table.
Buyers
Gain a clearer understanding of the financial performance, risks and opportunities associated with the business.
Sellers
Identify matters that may benefit from clarification or resolution before engaging with potential purchasers or investors.
Lenders and investors
Independent analysis to support lending, investment and transaction decisions.
Questions we're asked most.
What is financial due diligence, in plain terms?
A detailed review of a business's financial information to better understand its earnings, financial position and the matters that may influence future performance.
How is due diligence different to an audit?
An audit provides assurance that financial statements fairly present historical financial information. Due diligence is a broader commercial review that considers financial performance, risks and other matters relevant to a transaction or investment.
How long does a due diligence review take?
Most SME engagements are completed within one to two weeks after receiving the required information, although timing depends on the size and complexity of the business.
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.
Do you work outside the Western Cape?
Yes. We act on mandates in Cape Town, Pretoria, Johannesburg and nationally.
Speak to an advisor.
Tell us about your business and what you're looking to achieve. Email, WhatsApp or call us — we reply within one working day, at no charge and no obligation.
- A fixed-fee proposal in writing before any work begins
- Every enquiry read personally, not routed through an assistant
- Treated as confidential, with no obligation
“A valuation should tell you where the value comes from — not just what the number is.”
MJ Hartman, Founder