Investors who want to take over companies or parts of companies need reliable and deep transparency on the financial status of the transaction object. This is the only way to ensure objective valuation. The financial reporting of the transaction object must be reviewed in detail and elements relevant for valuation such as adjusted EBITDA, working capital and net financial debt must be documented. Depending on the situation, the analysis of the corporate planning is also part of the FDD.
For time and cost reasons, we recommend dividing the FDD into two phases: In phase one, the focus is on identifying deal breakers as part of a "red flag report". In phase two, a more detailed FDD report follows in accordance with the extended focus agreed with the prospective buyer. In general, added value can result from a holistic understanding of the transaction subject matter, which is why the combination of FDD with commercial and operational due diligence is possible and recommended.