Financial due diligence that holds up in the data room.
Buyer-side and sell-side financial due diligence for investors, acquirers, and the companies they are looking at. Megan VanWinkle, CPA, MBA, reviews the quality of revenue, margins, working capital, the forecast, the books and controls, and the systems behind them, and writes a report you can put in front of a committee. Two to three weeks. We do this diligence for our own family office before we write a check.
Six areas, each with a finding and a fix
Every area gets a risk rating, what it costs to remediate, and whether it belongs in the price, the purchase agreement, or the 100-day plan.
Quality of revenue
Recognition policy, recurring versus one-time, concentration, churn, and whether the revenue in the deck matches the revenue in the ledger.
Margins and cost structure
Gross margin by product and customer, what sits in cost of revenue, and the fixed costs that don't scale down.
Working capital and cash
Receivables, payables, deferred revenue, and the cash conversion cycle. What the business actually needs to run after close.
Forecast and assumptions
Whether the model ties to history, which assumptions carry the plan, and what happens to cash when the optimistic ones miss.
Books, close, and controls
How fast the close is, how often the numbers move after reporting, who can move money, and whether an auditor could work from these records.
Systems and data
The accounting system, billing, payroll, and the spreadsheets in between. Whether the numbers depend on one person and a formula nobody else understands.
A report the committee can act on
- Findings ranked by risk. Critical, important, and noted. Each with evidence, not opinion.
- Adjustments that matter. The items that change the earnings picture, the working capital target, or the price.
- Questions for the agreement. Reps, warranties, escrow, and the conditions worth negotiating.
- Inputs to the 100-day plan. What to fix first after close, and who should own it. See finance integration.
- A readout. A call with the deal team to walk the findings and answer the questions the report raises.
Find it before the buyer does
A sell-side review ahead of a raise or sale surfaces the issues on your schedule, with a remediation plan you control. The buyer's review then confirms what you already told them.
If the review finds that the books need a real close before the process starts, Megan can run it as interim CFO through the transaction. If an audit is required, see audit readiness.
Two to three weeks, start to readout
The timeline depends on the size of the company and how quickly the data room and the finance team are available.
Scoping call
The deal, the questions the committee needs answered, the timeline, and what access is possible. A fixed scope and price follow.
Access and interviews
The ledger, bank statements, billing, payroll, contracts, the model, and the data room. Interviews with the finance team and whoever owns the spreadsheets.
Analysis
Revenue tie-outs, margin analysis, working capital, forecast testing, and a review of the close and controls. Follow-up questions as they come up.
Report and readout
The written report, a readout with the deal team, and answers to the questions it raises. The report is yours for the data room.
Both sides of the table
Most diligence is written by people who have never had to live with the result. We have.
Through our family office, Megan and I review companies before we invest and follow what happens to them afterward. Megan has run finance and accounting inside a large company for years, so she knows what a close looks like when it works and what it looks like when it is held together by one person and a spreadsheet.
Pair this with technical due diligence and the committee gets the technology and the numbers from one team, on one timeline.
Direct investments and a limited partner in venture funds, including DeepWork Capital Fund 3.
Years in finance and accounting at Disney, currently managing financial systems.
Technical and financial diligence from one practice, written for the same committee.
Financial due diligence questions
What does financial due diligence cover?
Quality of revenue, margins and cost structure, working capital and cash, the forecast and its assumptions, the books, close, and controls, and the systems that produce the numbers. Each area gets a finding, a risk rating, and what it means for price, the purchase agreement, or the plan after close.
How long does financial due diligence take?
Two to three weeks from access to readout. Small companies and narrow questions go faster. The timeline depends on how quickly the data room and the finance team are available.
Is this a quality of earnings report?
No. This is operator diligence from a CPA who has run finance inside a large company and invests through a family office, not an attest engagement from an accounting firm. It complements a formal quality-of-earnings report when a deal needs one, and it often tells you whether you need one.
Buyer-side or sell-side?
Both. Buyer-side for investors and acquirers who need an independent read before they commit. Sell-side for companies that want to find and fix the issues before the buyer's team does.
Can you do technical due diligence at the same time?
Yes. Justin VanWinkle leads technical due diligence and Megan leads financial. Both reports come from the same practice, on the same timeline, written for the same committee.
Who have you done financial due diligence for?
Our own family office, which invests directly in early-stage technology companies and as a limited partner in venture funds, and clients preparing for a raise or a sale. Client names are shared on a call, with permission.
What does financial due diligence cost?
A fixed price, scoped after a call based on the size of the company and the questions the committee needs answered. Settled in the first conversations and written into the agreement.
Have a deal in motion?
Tell us the timeline. You'll have a scope and a price within a few days.