What are the red flags need to focus on financial due diligence?

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January 26, 2024

by an member from New Jersey Institute of Technology in Cumming, GA, USA

Other than looking into P/L, Tax returns, and Balance sheet, what are the other 3 major red flags that need to focus on financial due diligence?

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Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
From a lenders perspective I think you need to get your arms around the following: 1) Future CAPEX needs for the business. What have they been spending and what will they need to spend going forward; 2) the working capital needs of the business and being sure you have sufficient working capital post closing; and 3) usually standard with any due diligence but reviewing the bank statements and verifying revenues and cash flow. I hope this helps.
commentor profile
Reply by an member
from New Jersey Institute of Technology in Cumming, GA, USA
Thanks Brad
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