Financial & Tax Due Diligence

Financial and Tax Due Diligence is the process of thoroughly evaluating a company’s financial and tax records before entering into a business transaction such as mergers, acquisitions, or investments. This crucial step helps assess the financial health of a business, identify any potential risks, liabilities, and ensure compliance with tax laws. Financial and tax due diligence ensures that both parties involved in the transaction are fully informed and protected from unforeseen financial or legal issues.

Documents Required

Financial Due Diligence

Financial Statements for the last 3–5 years

Bank Statements for the last 6–12 months

Tax Returns for the last 3 years

Debt and Liability Schedule

Contracts and Agreements

Inventory Records

Asset Valuation Reports

Business/Operational Licenses

Litigation History (if applicable)

Tax Due Diligence

Tax Returns for the last 3 years

Tax Payment Receipts

Tax Assessments and Notices from Authorities

Tax Compliance Reports

Transfer Pricing Documents (if applicable)

Tax Liabilities and Contingencies

VAT/GST/Excise Returns (if applicable)

Process Timeline

Initial Consultation and Scope Definition

Understand the client’s objectives, whether for an acquisition, investment, or compliance, and define the scope of the due diligence process.

Document Request and Collection

Gather financial records, tax filings, contracts, bank statements, invoices, and other relevant documents from the target business or entity.

Financial Statement Analysis

Examine financial statements, including balance sheets, income statements, and cash flow statements, to assess accuracy, performance, and financial health.

Tax Compliance Review

Review past tax filings, tax audits, GST returns, and compliance with local and international tax laws to identify any discrepancies or liabilities.

Assessment of Liabilities

Identify existing or potential liabilities such as loans, overdue taxes, penalties, or contingent liabilities that could impact the client’s decision.

Review of Contracts and Agreements

Analyze agreements with suppliers, customers, or lenders to identify financial obligations, risks, or hidden costs.

Verification of Assets and Valuations

Confirm ownership and valuation of assets, including physical, intellectual, and intangible assets, to ensure accurate representation.

Analysis of Key Financial Ratios

Evaluate profitability, liquidity, solvency, and efficiency ratios to provide insights into the entity’s financial performance and stability.

Tax Optimization Opportunities

Identify opportunities for tax savings, credits, or incentives that could benefit the client in the transaction.

Risk Identification and Mitigation

Highlight financial and tax risks and recommend strategies to mitigate them, such as renegotiating terms or seeking indemnities.

Preparation of Due Diligence Report

Compile findings into a comprehensive report, detailing financial health, tax compliance, risks, and recommendations.

Client Review and Finalization

Present the findings to the client, address queries, and assist in decision-making based on the due diligence outcomes.

Ongoing Support Post-Diligence

Provide support for transaction negotiation, structuring, or compliance based on the due diligence results.

Find the Perfect Fit for Your Budget

Choose from our range of flexible pricing options that cater to your specific needs.

₹19,999

Basic Plan

A brief description goes here

Get Started

Initial consultation to understand the scope and objectives of the due diligence

Review of financial statements for the last 2-3 years (balance sheet, profit & loss, cash flow)

Basic analysis of financial health, including liquidity, profitability, and solvency

Tax compliance review (e.g., tax returns, tax filings) for the last 2 years

Identification of major risks, liabilities, and potential tax exposures

Email support for 1 month post-service

₹39,999

Standard Plan

A brief description goes here

Get Started

Comprehensive consultation to determine due diligence scope, objectives, and risk areas

Detailed review of financial statements (3-5 years) for accuracy and completeness

In-depth financial analysis, including revenue recognition, cost structure, and working capital

Detailed review of tax compliance and any pending or potential tax disputes or audits

Verification of the business’s tax credits, exemptions, and other tax-related benefits

Evaluation of financial reporting practices and internal controls

Risk assessment report with actionable recommendations

Email and phone support for 2 months post-service

₹79,999

Pro Plan

A brief description goes here

Get Started

Full consultation to align financial and tax due diligence with strategic business goals

Complete financial analysis covering 5+ years of financial statements and records

Detailed review of accounting practices, revenue recognition, capital expenditures, and liabilities

Thorough assessment of tax positions, pending disputes, tax credits, and tax audits.

Review of off-balance sheet items, contingent liabilities, and any ongoing financial obligations

Analysis of business transactions for tax efficiency, including tax planning and optimization strategies

Customized recommendations for improving financial and tax compliance

Assistance with negotiations or resolving any identified risks or discrepancies

Extended email, phone, and on-site support for 6 months post-service

Frequently Asked Questions

Find answers to commonly asked questions about our products and services.

Why is Financial & Tax Due Diligence necessary?

Financial and tax due diligence helps assess the true financial health of a business, identify potential risks, and ensure that the business complies with tax regulations. It provides a clear picture of liabilities, financial performance, and tax risks.

What is typically covered under Financial Due Diligence?

Financial due diligence typically covers the company’s financial statements, accounting policies, capital structure, cash flow, and any outstanding debts or liabilities. It also assesses the company’s business model and future financial prospects.

What is included in Tax Due Diligence?

Tax due diligence reviews the company’s tax filings, pending tax liabilities, tax disputes, and compliance with relevant tax laws (e.g., GST, income tax). It ensures that there are no hidden tax risks that could affect the deal.

How long does the due diligence process take?

The duration of the due diligence process can vary, but typically it takes between 2-6 weeks, depending on the size and complexity of the business being reviewed.

Can due diligence uncover financial risks or hidden liabilities?

Yes, due diligence is specifically designed to uncover any hidden financial or tax liabilities, such as unpaid taxes, pending legal disputes, or inaccuracies in financial reporting, which could affect the deal’s value or terms.

Is due diligence required for all types of business transactions?

While it is most common in mergers, acquisitions, and investments, due diligence is highly recommended for any significant business transaction where financial and tax accuracy is critical.

What happens if the due diligence report uncovers issues?

If issues are uncovered, both parties can renegotiate the deal, restructure the terms, or even cancel the transaction. The findings provide leverage for negotiation, ensuring that risks are addressed before proceeding.

How much does Financial and Tax Due Diligence cost?

The cost depends on the size, complexity, and scope of the business. We offer customized pricing based on your specific needs and the level of detail required. Contact us for a quote tailored to your project.