Advisory & Transactions

Transaction Advisory Services

Diligence that establishes what you are actually buying, before the price is fixed.

Independent financial, tax and commercial due diligence for acquirers, investors, promoters and lenders. We normalise earnings, set a defensible working capital peg and quantify what a change of control will alter. Findings are reported as they emerge, while price and structure are still open.

Typical turnaround
4 to 6 weeks for a single-entity mid-market target with reliable books and a responsive data room; 8 to 12 weeks where the target is multi-entity or cross-border, where records require reconstruction before analysis can begin, or where the scope extends into commercial and operational diligence.
Service code
ART-TAS-001
Engagement models
Fixed fee · Milestone-based · Fixed fee with abort discount
Delivery
Virtual, secure document exchange

Indicative fee from

₹3,50,000

Indicative starting fee for financial and tax due diligence on a single-entity mid-market target. Final fee is confirmed after scoping the target's revenue scale, entity count, review period and record quality.

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  • Engagement letter issued before work begins
  • Named engagement lead and defined reporting cadence
  • Confidentiality and access controls on all workpapers
  • Fee adjusted if the confirmed scope is smaller

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Description

Deals rarely fail at signing. They fail eighteen months later, when the earnings that justified the price turn out to have been carried by a one-time contract, a deferred maintenance cycle, or a working capital position inherited at exactly the wrong point in the season. By then the consideration has been paid, the seller has moved on, and the correction is a write-down rather than a negotiation.

Transaction advisory exists to move that discovery forward, from post-close to pre-signing, while it still carries commercial value. The work is to establish what a target actually earns, what it actually owns, what it actually owes, and which of those figures will survive a change of control. Reported EBITDA is a starting point, not an answer.

What the engagement covers

Financial diligence begins with a quality of earnings analysis: normalising reported profit for non-recurring items, owner-related costs, related-party pricing, accounting policy choices and cut-off errors, then rebuilding a run-rate the buyer can underwrite. Alongside it we construct a monthly net working capital series across twenty-four months to identify seasonality and propose a defensible peg, and a net debt schedule that captures the debt-like items sellers often leave out: unfunded gratuity and leave encashment, disputed statutory dues, capex creditors, customer advances, and lease liabilities recognised under Ind AS 116 or IFRS 16.

Tax and regulatory diligence runs in parallel. That means open assessments and appellate history under the Income-tax Act, indirect tax exposure traced through mismatches between GSTR-2B, GSTR-3B and the books, transfer pricing documentation where cross-border related-party flows exist, FEMA compliance on non-resident shareholding, and corporate records under the Companies Act 2013, including share capital history, charge registrations and board approvals for related-party transactions. For targets outside India we map the equivalent exposures under local GAAP and the applicable tax regime, and flag where a domestic assumption does not travel.

How the virtual model works on a live deal

Diligence is document-heavy and time-boxed, which suits a remote engagement team well. An information request list goes out on day one, structured by workstream and sequenced so the target finance function is not overwhelmed in week one and idle in week three. Documents move through a secure exchange with access logging. Issues are logged and circulated weekly rather than held back for a single report at the end, and material findings are escalated as red flags within the first fortnight, while price and structure are still open. Management sessions are scheduled in short, focused blocks against a published question list, which protects the target from the open-ended interrogation that sours a process before it completes.

Who this is built for

Strategic acquirers buying capability, capacity or market access. Financial investors underwriting a growth thesis where the entry multiple leaves no room for a surprise. Promoters buying out a partner or a founding shareholder, where the counterparty knows the business better than they do. Lenders sizing acquisition finance against a borrower’s real cash generation rather than its reported profit. And sellers commissioning vendor diligence before going to market, so that issues are found and framed by their own advisers rather than discovered by a buyer at the moment when the answer costs the most. The common thread is a decision with a number attached and a short window in which to test it.

Engagement models

Fixed fee · Milestone-based · Fixed fee with abort discount

Expected turnaround

4 to 6 weeks for a single-entity mid-market target with reliable books and a responsive data room; 8 to 12 weeks where the target is multi-entity or cross-border, where records require reconstruction before analysis can begin, or where the scope extends into commercial and operational diligence.

Scope of Work

  • Quality of earnings analysis normalising reported EBITDA for non-recurring, owner-related, related-party and accounting-policy adjustments across a trailing twenty-four month period
  • Net working capital analysis with monthly trend, seasonality assessment and a defensible peg proposal drafted for use in the share purchase agreement
  • Net debt and debt-like items schedule covering borrowings, unfunded gratuity and leave encashment, disputed statutory dues and Ind AS 116 or IFRS 16 lease liabilities
  • Revenue quality testing by customer concentration, contract renewal profile, pricing history and cohort retention, with cut-off and recognition testing at period ends
  • Cost base review separating fixed, variable and discretionary spend, and isolating costs that will not transfer to the acquirer after completion
  • Direct and indirect tax diligence covering open assessments, appellate history and input credit mismatches between GSTR-2B, GSTR-3B and the books of account
  • Transfer pricing and FEMA review where the target carries non-resident shareholding, cross-border related-party flows or external commercial borrowing exposure
  • Corporate and secretarial diligence across share capital history, ROC filings under the Companies Act 2013, charge registrations and related-party approvals
  • Contingent liability and litigation mapping with counsel input, quantifying exposure ranges and probability weighting for the purchase price adjustment
  • Forecast challenge testing management projections against historical achievement, order book, installed capacity, hiring plans and observable market data
  • Deal structuring input on the price mechanism, comparing locked box against completion accounts, and sizing escrow and indemnity cover for identified exposures
  • Post-signing support on completion accounts, working capital true-up disputes and the first hundred days of finance integration

Key Deliverables

Red Flag Memorandum

A short, early document listing findings capable of breaking the deal or moving the price. Issued within the first two weeks so that terms can be revisited while there is still leverage.

Financial Due Diligence Report

The full report covering earnings quality, working capital, net debt, revenue durability, cost base and forecast credibility, with a supporting databook of underlying schedules.

Adjusted EBITDA and Net Debt Bridge

A working model that traces every adjustment from reported figures to the underwritten position, each line referenced to its source document and rationale so it can be audited by the other side.

Working Capital Peg Analysis

A twenty-four month net working capital series with seasonality commentary, a proposed peg and sensitivity around it, written in a form legal counsel can lift into the agreement.

Tax and Regulatory Exposure Schedule

Quantified exposures by head, each with a probability assessment and a recommended treatment: price adjustment, specific indemnity, escrow, or acceptance with monitoring.

SPA Input Note

Clause-level commentary for legal counsel linking diligence findings to representations, warranties, indemnities, disclosure schedules and the price adjustment mechanic.

Deal Team Walkthrough

A working session with the acquirer, its lender or its investment committee covering findings, the judgements behind them, and the uncertainties that diligence could not close.

How the Engagement Runs

Scoping and materiality

We agree the deal rationale, the periods under review, the entities in scope and the materiality thresholds that will govern reporting. The acquirer, its legal counsel and its lender are aligned on scope before fieldwork starts. The phase closes with a signed scope note and the day-one information request list.

Information gathering and data room review

The request list is issued by workstream and tracked against responses. We review the data room, trial balances, ledgers, tax records and contracts, and open an issues log from the first week. The phase closes when the core financial and tax records are received and reconciled to the statutory accounts.

Analysis and management interviews

Earnings normalisation, working capital, net debt and revenue testing run in parallel with tax and corporate review. Focused sessions with the target CFO and process owners resolve open items against a published question list. The phase closes when the adjustment schedule is stable.

Red flag reporting

Price-moving and deal-breaking findings are reported early, in a short memorandum to the acquirer and its advisers. This is a decision point: proceed on revised terms, extend scope into a specific area, or withdraw. The phase closes with a documented instruction on how to proceed.

Final report and negotiation support

The full report and databook are issued, followed by a walkthrough with the deal team. We support the negotiation with clause-level input for counsel and respond to counterparty challenge on individual adjustments. The phase closes at signing.

Completion and true-up support

Where the mechanism is completion accounts, we assist with preparation or review of the closing statement, the working capital true-up and any expert determination that follows. The phase closes when the final consideration is settled between the parties.

What You Gain

Price supported by evidence

Every adjustment to the offer traces to a document and a workpaper. Negotiations move from assertion to arithmetic, which is a materially stronger position to argue from.

Fewer surprises after completion

Exposures identified before signing become indemnities, escrows or price reductions. The same exposures found after signing become the acquirer's own problem, funded from its own balance sheet.

Structure that carries risk correctly

Diligence findings feed directly into how the deal is papered, so that identified risk sits with the party best placed to have known about it and to control it.

Faster credit and committee approval

Lenders and investment committees ask a predictable set of questions. A report built to answer them shortens the approval cycle rather than triggering a second round of requests.

Deal team capacity preserved

Information requests, follow-ups and the target's question queue are managed by the engagement team, leaving internal management free to keep running the acquiring business.

Integration baseline from day one

The diligence file becomes the integration baseline: which controls are weak, which reporting is unreliable, and which finance processes need attention in the first quarter of ownership.

Industries We Serve With This Engagement

Manufacturing and industrial productsInformation technology and software servicesHealthcare, hospitals and diagnosticsConsumer brands and retailLogistics, warehousing and supply chainFinancial services and NBFCsPharmaceuticals and life sciencesEducation and skillingBusiness services and staffing

Frequently Asked Questions

An audit expresses an opinion on whether financial statements give a true and fair view under a defined reporting framework, with materiality set for the entity as a whole. Due diligence asks a different question: what is a buyer paying for, and what changes when ownership changes. We normalise earnings, test whether revenue is durable, and quantify items an audit may reasonably treat as immaterial but which move price materially, such as a single customer at forty per cent of revenue or a working capital cycle funded by stretched creditors. The two are complementary. Neither substitutes for the other, and a clean audit opinion does not close the diligence question.

Ideally once a non-binding offer or term sheet is in place and exclusivity has been granted, but before the price mechanism is locked into drafts. Starting earlier tends to waste fees on targets that never reach exclusivity. Starting later removes the reason for doing the work, because findings arrive when the commercial terms have already hardened and renegotiation carries a relationship cost. A useful discipline is to reserve the first two weeks of exclusivity for red flag work and treat that memorandum as the checkpoint for whether to continue investing in the process.

Quality of earnings analysis rebuilds reported profit into a figure a new owner could reasonably expect to repeat. It removes items that will not recur, such as an insurance recovery or a one-off government incentive, adds back costs that belong to the outgoing owner rather than the business, adjusts related-party transactions to arm's length pricing, and corrects revenue or expense recognised in the wrong period. Because most mid-market deals are priced on a multiple of EBITDA, every rupee of adjustment is multiplied. An adjustment of one crore at a seven times multiple is a seven crore difference in enterprise value.

Yes, and it is common in owner-managed businesses. Where books are incomplete we reconstruct from primary sources: bank statements, GST returns, e-way bills, purchase and sales registers, stock records and third-party confirmations. Bank-to-book reconciliation across the review period is usually the fastest route to an honest revenue and cost picture. We are explicit in the report about what has been derived rather than verified, and about the residual uncertainty that carries. That transparency matters more than a clean-looking report, because it tells the acquirer exactly which parts of the price rest on inference.

Yes. For groups we consolidate at the level the acquirer is buying, eliminate intra-group transactions, and separate the performance of each entity so that loss-making arms are not concealed by profitable ones. For targets outside India we work to the applicable local GAAP or IFRS, and coordinate with local tax and legal specialists in the relevant jurisdiction for statutory exposures that require on-the-ground knowledge. Cross-border deals also raise FEMA pricing, withholding, permanent establishment and repatriation questions, which we flag in scoping so they are addressed in structuring rather than discovered at closing.

The peg is the level of working capital the seller must leave in the business at completion, usually set as a normalised average over a representative period. If actual working capital at completion is below the peg, the consideration is reduced; if above, the seller is paid the excess. It is negotiated, not imposed, which is why the underlying analysis matters. A twelve-month average will produce a different number from a twenty-four month average in a seasonal business, and the definition of which items are included, particularly customer advances and capex creditors, is often worth more than the arithmetic.

Yes, subject to the addressee and reliance terms agreed in the engagement letter. Reports are typically addressed to the acquiring entity, with named third parties such as a lender or a co-investor permitted to rely on the report under a separate reliance letter that sets out the scope and the limitation of liability. This is standard practice and lenders expect it. Tell us at scoping who will need reliance, because retrofitting it after issue is slower and occasionally requires additional procedures to meet the third party's requirements.

We provide the financial and tax input that structure depends on: which mechanism suits the target's cash profile, how to size escrow against quantified exposures, which findings warrant a specific indemnity rather than a general warranty, and how earn-outs should be defined so the metric cannot be manipulated after completion. Legal drafting remains with the acquirer's counsel, and we work alongside them rather than in place of them. In practice the most valuable contribution is defining earn-out and price adjustment metrics precisely enough that they cannot be disputed later.

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