If you are reviewing an FDD report template or a finalized deliverable, maximize its utility by focusing on these strategic areas: Renegotiating the Purchase Price
Investors often search for terms like to find frameworks, templates, and best practices. This article breaks down the anatomy of a KPMG-style FDD report, its core components, and how to leverage these insights for successful deals. What is a Financial Due Diligence Report?
A standard KPMG Financial Due Diligence (FDD) report is structured to move from high-level deal-breakers to granular data analysis
Ensuring no stone is left unturned regarding tax liabilities or off-balance-sheet items. financial due diligence report kpmg pdf
Reviewing key management salaries, bonus structures, and employee turnover metrics. 3. The Core Concept: Quality of Earnings (QoE) Adjustments
When a company or private equity fund is looking to acquire a business, KPMG conducts buy-side due diligence. This report helps the buyer confirm the financial health of the target, test their own investment thesis, and identify key risks that should be addressed in the purchase agreement. KPMG can also assist in drafting the financial sections of the Share Purchase Agreement (SPA) based on their findings.
Unfunded pension liabilities, deferred compensation, long-term lease obligations, and unpaid tax liabilities. 3. Key Adjustments in Financial Due Diligence If you are reviewing an FDD report template
A typical KPMG report includes a detailed analysis of the target's and net debt position . This includes:
The report will calculate a "Target Working Capital." This prevents the seller from depleting inventory or stretching payables right before the sale to harvest extra cash. 5. Net Debt and Debt-Like Items
A Financial Due Diligence (FDD) report is a critical cornerstone of any corporate transaction, whether it involves a merger, acquisition, or joint venture. Among the global accounting elite, KPMG is widely recognized for producing some of the most rigorous, insight-driven FDD reports in the financial world. A standard KPMG Financial Due Diligence (FDD) report
A KPMG financial due diligence report is a detailed, independent analysis of a target company's financial health and operational performance, produced by the firm's Transaction Services practice. Its primary purpose is to provide a clear, evidence-based picture of the business to support critical investment decisions.
Use identified risks to draft specific indemnities, warranties, or earn-out structures in the legal contracts.
Use identified QofE reductions or debt-like items as leverage to negotiate a lower purchase price or to request an escrow account for historical tax liabilities. Refining the Purchase Agreement (SPA)
Buyers need to know the exact enterprise-to-equity value bridge. KPMG identifies "debt-like items" that might not sit under traditional bank debt, such as historical tax exposures, deferred Capex, or unpaid restructuring costs. Buy-Side vs. Sell-Side FDD Reports
A standard-bearer in this space is the . As one of the Big Four accounting firms, KPMG delivers sophisticated data analysis that translates raw financial figures into strategic transaction insights.
