Buying a business · Financial due diligence
Financial Due Diligence for Buying a Business
Before you sign, find out whether the profit you are paying for is real, whether it will continue under your ownership, and what liabilities come with it. Independent, fixed-fee financial due diligence for buyers of small and medium businesses in Melbourne.
- Are the profits real, and will they continue?
- Hidden liabilities found before you sign
- A price check and the questions to put to the seller
What we do
A business for sale is usually presented at its best: a broker's information memorandum, the seller's adjusted profit and a list of add-backs. We test those numbers against the evidence: tax returns, BAS, bank statements, payroll and management accounts.
We rebuild the profit a new owner can expect (maintainable earnings), check which add-backs are supported, and look for the liabilities and risks that would change the price or the deal terms. Our background in valuation and forensic accounting means we look at whether the numbers make sense as well as whether they add up.
You receive a clear report of what we found, what it means for the price, and the specific questions and conditions to raise with the seller, the broker and your lawyer before you commit.
What we check before you buy
Profit you can rely on
Whether reported profit matches tax returns, BAS and bank deposits, and which add-backs and owner adjustments are supported by evidence.
Revenue quality and concentration
Trends by month and customer, reliance on a few customers or one contract, one-off income, and sales that rose just before the business went to market.
Staff, wages and super
Award compliance, unpaid super and leave balances. If staff transfer with the business, some of these costs can become yours.
Debts, tax and hidden liabilities
ATO and BAS position, unpaid creditors, related-party loans, equipment finance and commitments the seller may not mention.
Working capital and stock
How much stock, debtors and cash the business needs to run, and whether the stock is worth what the seller says.
Owner dependence
What happens to sales and supplier terms when the current owner leaves, and how much of the goodwill will actually transfer to you.
Our approach
- Initial deal review: a quick read of the information memorandum and summary financials to tell you whether the deal is worth full due diligence, and what to request.
- Financial due diligence: we test earnings, add-backs, revenue, wages, debts, tax and working capital against the records.
- Findings report: what checks out, what doesn't, the effect on price, and questions and conditions for the contract.
- Support through negotiation with your broker, accountant and lawyer, and a valuation if you need an independent price.
Financial due diligence is not an audit, and it is not legal due diligence. Your lawyer reviews the contract, lease, licences, title and other legal matters. We work alongside them so the financial findings feed directly into the contract terms.
Principal
Principal & Director
Erin Huang, CPA
Principal & Director, Maxwind
Erin is the principal of Maxwind Analytics. Her background combines corporate finance, building and running businesses, and specialist valuation and forensic work.
Maxwind Analytics has advised Melbourne businesses and their advisers since 2020.
About ErinHow the engagement works
- Initial deal reviewA short, fixed-fee review of what the seller has provided, with a go, no-go or proceed-with-caution view and a list of records to request.
- Scope and fixed feeWe agree what will be checked, the timing and the fee before full due diligence starts.
- Due diligence and findingsAnalysis of the records, questions to the seller through the broker, and a written findings report.
- Negotiation supportWe explain the findings to you, your lawyer and your accountant, and help frame price adjustments and contract conditions.
Fees and timing
Most buyer due diligence is offered with a clear scope and a fixed fee, starting with a short initial deal review so you only pay for full due diligence on deals worth pursuing.
Questions we are often asked
When should I start due diligence?
Before you are committed. Ask your lawyer to make the contract subject to satisfactory due diligence, or start before you sign. Once the deposit is unconditional, your leverage is gone.
How long does financial due diligence take?
For a small business with reasonable records, often two to four weeks from receiving the records. Delays usually come from slow or incomplete answers from the seller.
The broker has already provided the financials. Isn't that enough?
The broker acts for the seller. Their figures are a starting point, not independent verification. Due diligence tests them against tax returns, BAS and bank records.
What if the seller won't provide the records?
That is a finding in itself. A seller with nothing to hide can usually provide tax returns, BAS and bank statements under a confidentiality agreement.
Do I still need a lawyer?
Yes. We cover the financial side. Your lawyer covers the contract, lease, licences and legal risks. The two work best together.
Can you also tell me what the business is worth?
Yes. Due diligence often leads into an independent valuation, so you know what a fair price is before you negotiate.
Check a business before you buy
A short conversation is usually enough to tell whether we can help and what the work would involve.
