Financial Due Diligence Analyzer

Financial Due Diligence Analyzer

Run comprehensive financial due diligence on acquisition targets, investment opportunities, or partnership prospects. Built for PE firms, corporate development teams, and founders evaluating deals.

What This Does

Generates a complete due diligence package: Quality of Earnings (QoE) — normalize EBITDA, strip one-time items, identify recurring vs non-recurring revenue Working Capital Analysis — NWC trends, peg calculation, seasonal adjustments Revenue Quality — customer concentration, churn, cohort analysis, contract backlog Debt & Liabilities — hidden obligations, off-balance-sheet items, contingent liabilities Cash Flow Bridge — EBITDA to free cash flow conversion, capex requirements Red Flag Scanner — 23 common deal-killers ranked by severity

How to Use

Tell your agent: "Run financial due diligence on [company/deal]" Provide what you have: Financial statements (P&L, balance sheet, cash flow) — even partial Revenue breakdown by customer/product Known deal terms (purchase price, structure) The agent will generate a structured diligence report with findings, risks, and negotiation points.

EBITDA Normalization Checklist

Adjustment CategoryCommon ItemsDirectionOwner compensationAbove/below market salary, personal expenses+/-One-time revenuePPP loans, insurance claims, litigation settlements-One-time expensesRestructuring, M&A costs, natural disaster+Related partyAbove/below market rent, intercompany charges+/-Accounting changesRevenue recognition timing, reserve adjustments+/-Run-rate adjustmentsNew contracts, lost customers, price changes+/-

Revenue Quality Score (0-100)

FactorWeightScoringRecurring vs one-time25%>80% recurring = 25, >60% = 18, >40% = 12, <40% = 5Customer concentration20%Top customer <10% = 20, <20% = 15, <30% = 10, >30% = 3Retention rate20%>95% = 20, >90% = 15, >85% = 10, <85% = 5Contract backlog15%>12mo coverage = 15, >6mo = 10, >3mo = 6, <3mo = 2Growth trajectory10%>30% YoY = 10, >15% = 7, >5% = 4, declining = 1Pricing power10%Annual increases + low churn = 10, some = 6, none = 2

Working Capital Peg

• NWC Peg = Average of trailing 12 months normalized NWC
• Normalized NWC = Current Assets (excl. cash) - Current Liabilities (excl. debt)
• Adjustments:
• Remove seasonal spikes (use monthly data, not quarterly)
• Strip one-time receivables/payables
• Normalize inventory to steady-state
• Adjust for known post-close changes
• If NWC at close > Peg → Seller receives difference
• If NWC at close < Peg → Buyer receives difference

Critical (Deal-killers)

Revenue concentration >40% single customer Declining revenue with no credible turnaround plan Negative or deteriorating cash conversion (EBITDA to FCF <50%) Undisclosed litigation or regulatory action Key person dependency with no succession plan Material related-party transactions at off-market terms Unrecorded liabilities (tax, environmental, legal)

Serious (Price adjustments)

Customer churn accelerating quarter-over-quarter Gross margin compression >200bps annually Capex requirements understated (deferred maintenance) Working capital trends moving against buyer Aggressive revenue recognition policies Unusual pre-close transactions (dividends, bonuses) Technology debt requiring material investment Regulatory changes threatening core business model

Notable (Negotiation points)

Management team retention risk Vendor concentration >30% single supplier IP ownership gaps or licensing dependencies Insurance coverage gaps Environmental liabilities (real estate) Employee benefit obligations (pension, OPEB) Tax position optimization opportunities Integration complexity indicators

Quick Multiples Reference (2025-2026)

SectorEV/RevenueEV/EBITDANotesSaaS (<$10M ARR)4-8x15-25xHigher for >120% NRRSaaS ($10-50M ARR)6-12x20-35xRule of 40 premiumProfessional Services1-2x8-12xPeople-dependent discountManufacturing0.5-1.5x6-10xAsset-heavy adjustmentHealthcare Services1-3x10-15xRegulatory moat premiumFintech5-15x20-40xWide range, growth-dependentE-commerce1-3x10-18xBrand and margin quality

Purchase Price Allocation

• Enterprise Value
• Net Debt (total debt - cash)
• Transaction Expenses
• Working Capital Adjustment (vs Peg)
• + Earnout (if applicable, risk-adjusted at 50-70% probability)
• = Equity Value to Seller

Output Format

Your due diligence report should include: Executive Summary — deal overview, key findings, go/no-go recommendation Quality of Earnings — normalized EBITDA bridge with adjustments Revenue Analysis — quality score, concentration, trends Working Capital — NWC peg, seasonal analysis, close estimate Cash Flow — EBITDA to FCF bridge, capex analysis Red Flags — scored findings with severity and $ impact Valuation Check — multiples comparison, sanity test Negotiation Points — specific items for purchase agreement Built by AfrexAI — AI context packs for business operations ($47 each). More tools: AI Revenue Leak Calculator — Find where you're losing money Agent Setup Wizard — Deploy AI agents in minutes Full Context Pack Store — 10 industry packs, $47 each