Providing a data-backed foundation for the final "Enterpise Value to EBITDA" multiple. The Strategic Value of FDD
Ultimately, a financial due diligence report is a negotiation tool. If KPMG identifies $1M in "non-recurring" revenue, the buyer may be able to argue for a significant reduction in the purchase price based on the agreed-upon valuation multiple.
For sellers, undergoing a "Vendor Due Diligence" (VDD) by a firm like KPMG before going to market can help identify these issues early, allowing the seller to fix them or prepare a defense, ultimately leading to a smoother closing process. If you'd like to dive deeper into specific deal types: financial due diligence report kpmg pdf
Unlike a statutory audit, which verifies if financial statements are "fairly stated," financial due diligence is a forensic-style analysis designed for a buyer or lender. It identifies the underlying drivers of a business and uncovers potential "deal-breakers" or valuation adjustments.
Is the target company a or a manufacturing firm ? Do you need help calculating normalized working capital ? Providing a data-backed foundation for the final "Enterpise
This is the most critical section for stakeholders. It highlights:
KPMG analysts look for non-recurring items that inflate or deflate profit. Common adjustments include: For sellers, undergoing a "Vendor Due Diligence" (VDD)
This section analyzes how "sticky" the customers are. It often includes:
The report will calculate a "Target Working Capital." This prevents the seller from depleting inventory or stretching payables right before the sale to harvest extra cash. 5. Net Debt and Debt-Like Items
KPMG reports help buyers identify hidden liabilities, such as: Unfunded pension obligations. Change-of-control bonuses. Customer deposits or deferred revenue. Aged accounts payable. Why Investors Search for KPMG FDD Templates