Diligence readiness and data-room preparation
Funding and transactions
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On demand
An investor or buyer will ask for evidence behind the financial results, ownership and obligations of the business. If those records disagree, the management team must explain the differences while the transaction is already under time pressure.
TheTaxCo prepares and manages the evidence before and during diligence: the document request list, financial reconciliations, indexed data room, gap register and responses to diligence questions. We define the transaction, intended users and areas of review before requesting records.
Readiness work starts with the transaction
A minority investment, acquisition and lender review do not require identical information. We establish the entity and group perimeter, periods under review, likely transaction structure and proposed timetable. We also identify who is conducting the buyer’s or investor’s diligence so the preparation can respond to an actual request list where one exists.
You can start before a term sheet is signed. At that stage, the useful output may be a baseline review and a prioritised preparation plan. The absence of a buyer does not remove the need to understand missing ownership records or unreconciled accounts.
This service prepares the business and its records for scrutiny. Our experts handle the financial, legal and reporting work required for the transaction, with separate appointments and independence arrangements where an opinion or assurance report requires them.
Four areas that need to agree
Area | Typical readiness questions |
|---|---|
Ownership and company records | Do the cap table, share records, approvals and agreements describe the same ownership? Are transfers, grants and allotments traceable? |
Financial information | Do management accounts reconcile to the books and audited statements? Are revenue, margins, debt and working capital explained? |
Tax and compliance | Do filed returns agree with the relevant ledgers? Are outstanding notices, disputes and uncompleted filings identified? |
Contracts and people | Can material customer, supplier, borrowing and employment commitments be located? Are change-of-control, consent and incentive matters referred to the appropriate reviewer? |
The review distinguishes a missing copy from a missing underlying action. Locating a signed approval closes a document gap. Discovering that the approval was never obtained creates a different issue requiring a substantive decision. The register must preserve that distinction.
Make financial questions answerable
We identify the schedules needed to explain the business: revenue by relevant category, major customers, receivable ageing, inventory, debt, related-party balances, unusual expenses and significant changes in margins. The scope determines how far each schedule is reconciled and tested.
A proposed adjustment to earnings needs a clear explanation and supporting evidence. Calling an expense “one-off” does not establish that it will disappear after the transaction. Likewise, an old receivable is not collectible merely because it remains in the ledger. Management’s position, supporting documents and unresolved questions are recorded separately.
Where accounts require repair, the correction work is agreed before revised numbers are circulated. A data room with inconsistent versions can create more questions than an incomplete room with a clear explanation of what remains outstanding.
Organise access, versions and responses
The data-room index links each request to a document, reporting period, owner and status. File names and version references let the recipient distinguish a signed agreement from a draft and current financial information from an earlier estimate. Access permissions are agreed with the company and the transaction advisers, particularly for personal, payroll and commercially sensitive information.
We administer the data room under agreed platform and access permissions, maintain its index and track changes. The company approves what is released and to whom. The legal experts on the engagement determine how legally sensitive materials are handled.
Diligence questions are recorded with the source used for the answer, the responsible person and any unresolved dependency. An answer based on an estimate is identified as such. Responses should stay consistent with the financial model, agreements and previous disclosures.
Deliverables and priorities
You receive the request list and index, reconciled financial schedules, a gap register and a response tracker. Findings are prioritised by their likely effect on the transaction and the work required to resolve them.
For each material gap, the register states the issue, evidence, proposed action, responsible person and dependency. Some items can be addressed by obtaining an existing record. Others require accounting correction, management approval, legal advice or a third-party response. Those dependencies determine the preparation timetable.
Can you guarantee that diligence will find no issues?
No. The scope and evidence available limit the review, and an investor may investigate further or take a different commercial view. The purpose is to identify and address avoidable gaps and make the remaining position explainable.
Can the company start with incomplete records?
Yes. An initial inventory identifies what exists, what can be retrieved and what requires reconstruction. It should happen before promising a complete data room by a fixed date.
Will you negotiate the transaction?
Yes. Our financial and legal experts support negotiation of the transaction terms within the authority you give them. You approve the company’s commitments, and the investor makes its own investment decision. See funding round support for the financial work around investment terms and closing.
Email TheTaxCo, message us on WhatsApp or book a call. Share the proposed transaction, entities involved, expected diligence date and whether you already have a request list.