Small M&A Financial Due Diligence
Hands-on financial due diligence for small M&A — key metrics, verification, cost reality, and converting findings into deal terms
Explore topics
New here? Start at the home hub →7 articles
Small M&A Financial Due Diligence: The Complete Guide — Six Numbers to Check Before Buying a Company
A complete guide to buyer-run first-pass financial DD for small M&A deals. Drawing on three EXITs on the sell side of DD and building a financial DD tool: the six metrics, verification, process, and converting findings into price terms.
The Small M&A Quick DD Checklist — Documents to Request First and What to Verify
A working checklist for small M&A financial DD: the eight documents to request first with the purpose of each, statement-vs-tax-return reconciliation, balance verification, and how to build the question list — everything a buyer can do alone.
Financial DD Costs — Market Rates, and When to Outsource, DIY, or Use Tools
How much to spend on financial due diligence: the ¥500K–1M full-DD market rate, cost-effectiveness by deal size, the screen → narrow → outsource sequence, and scoped delegation — a budgeting guide for small M&A buyers.
The Minimum Financial Numbers for an Individual M&A Buyer — What to Check in the Statements
For time-poor individual buyers: which numbers in the financial statements matter. Six values from roughly twelve line items — normalized EBITDA, net debt, CCC, current ratio, equity ratio, and operating margin — mapped to the exact BS/PL accounts.
Where Financial Statements Hide Profit Adjustments and Window Dressing — Small M&A Red Flags
Where a seller's statements distort: tax-driven profit compression (director pay, insurance, private expenses) versus appearance-driven dressing (pulled-forward sales, inflated inventory, double books) — which accounts each shows up in, and how reconciliation and turnover-day analysis detect them.
Five Financial Failure Patterns in Small M&A — Were the Post-Closing Landmines Visible in DD?
Finance-driven small M&A failures reduced to five patterns — profitable-but-broke, profit illusion, net-debt blind spot, off-balance liabilities, working-capital starvation — each mapped to the DD metric or procedure that detects it before closing.
Share Deal vs. Asset Deal: How Financial DD Scope Changes — Which One Inherits Off-Balance Liabilities?
How DD priorities shift between small M&A structures: a share deal universally succeeds to off-balance liabilities and tax risk, weighting DD toward liability hunting; an asset deal shifts the battleground to asset existence and unit-level earning power. With a comparison table and the exceptions.
FAQ
- Q. Is financial DD necessary even for small M&A deals?
- Yes. Small-company statements are usually arranged around tax minimization, so trusting reported profit as-is misreads earning power. Even when a full accountant DD does not pay at the deal size, buyer-run first screening should never be skipped.
- Q. How does financial DD relate to valuation?
- Financial DD produces the inputs for valuation: normalized EBITDA feeds multiple-based pricing, and net debt bridges enterprise value to equity value. Valuation without DD is a calculation on untrusted inputs.
- Q. How does DD Tool relate to these articles?
- DD Tool is the author-built financial DD tool for small M&A. It automates the six metrics, five-level RAG rating, and industry benchmark comparison covered in these articles, runs in the browser, and never sends financial data anywhere.