Transaction Services fieldnotes
Decisions, evidence and worked examples for deal teams.
Mandate & workflow
Choosing AI software for financial due diligence: a complete guide for 2026
Evaluate the reviewed working paper, not the fluent answer. A useful TS tool keeps the source version, calculation and unresolved question attached to each proposed finding.
ChatGPT or a specialist tool for Transaction Services?
Compare approved workflows, not brands. Drafting a question is different from maintaining a controlled evidence register across a changing data room.
A financial due diligence IRL that management can actually answer
An IRL is a testable request register, not a shopping list of files. Specify entity, period, granularity and what makes the response complete.
Reconcile the VDR to the IRL without closing the wrong request
A matching filename is a lead, not evidence of completeness. Check perimeter, period and source version before deciding whether one document answers one or several requests.
Write a financial due diligence scope of work that controls scope creep
Specify the decision, perimeter, periods and output for each workstream. A SoW should also say what is excluded and how an additional procedure is authorized.
What buy-side diligence should add to a VDD report
Use the VDD as a starting evidence map, not as the buyer's investment conclusion. Update trading and test the buyer's specific perimeter, accounting definitions and operating assumptions.
Turn management Q&A into reviewable deal evidence
A transcript proves what was said, not that the statement is correct. Link the claim to dated documents and record the unresolved difference before updating the bridge.
Quality of earnings
Build a QoE bridge a buyer can challenge
Start from reconciled reported EBITDA. Separate accounting corrections, historical normalizations and forward-looking changes; do not mix them in one unexplained adjusted number.
Non-recurring EBITDA add-backs: test the cost that returns
An unusual invoice is not necessarily a non-recurring economic cost. Test whether the service, role or activity will need replacing after closing.
Revenue cut-off: follow delivery, not the invoice date
Test when control or the relevant performance obligation transfers under the applicable accounting framework. A December invoice does not prove December revenue.
SaaS due diligence: reconcile ARR without confusing it with revenue
ARR is a defined operating metric, not recognized revenue or EBITDA. Fix the measurement date and treatment of discounts, churn, usage and services before comparing companies.
Cash conversion: explain the gap below EBITDA
Bridge EBITDA to operating cash by removing non-cash items and showing working-capital movements. Keep capex, tax and financing separate; an operating cash proxy is not free cash flow.
Customer concentration: measure the margin at risk
Revenue concentration alone misses margin, contract duration and switching risk. Map customer groups consistently and test the contribution that could disappear, not only their percentage of sales.
Balance sheet & price
Set a working-capital peg without hiding seasonality
Calculate the target and closing NWC using the same perimeter and policies. A twelve-month average is a starting point, not an automatic fair target for a seasonal business.
Debt-like items: build a defensible classification register
Debt-like treatment is a transaction definition, not merely a balance-sheet caption. Examine economic nature, timing and the SPA, then cross-check NWC and valuation treatment.
Cash-free debt-free: reconcile enterprise value to equity value
Under a simple closing-accounts convention, equity equals EV plus eligible cash, less agreed debt and debt-like items, plus or minus the NWC deviation. The signed mechanism controls the actual calculation.
Inventory obsolescence: challenge the provision at SKU level
Age is a risk signal, not the valuation itself. Compare carrying cost with recoverable selling proceeds after completion and selling costs, using the applicable accounting framework.
IFRS 16: keep EBITDA, multiple and net debt on one basis
Lease accounting can raise EBITDA while creating lease liabilities. The valuation convention and SPA must explain whether multiples and debt are on a pre- or post-IFRS 16 basis.
Separation & transition
Carve-out standalone costs: replace allocations with an operating model
Group allocations are neither automatically avoidable nor a reliable standalone cost. Identify what services NewCo needs and price their replacement at the intended scale.
Price a TSA exit plan, not just a monthly service fee
The TSA budget depends on service scope and achievable exit dates. Model extensions and migration costs separately; a low monthly fee can still create a costly dependency.