M&A TRANSACTIONS: FINANCIAL DUE DILIGENCE FROM ZERO TO PROFESSIONAL

A concise, easy-to-use guide to the documents and procedures associated with financial due diligence.

Due diligence—financial analysis that’s an integral part of the sale or purchase of any business—is a complex process usually carried out by accountants and other financial professionals. Tseng’s book first draws on his years of experience with mergers and acquisitions to provide a detailed overview of due diligence that allows readers who have a basic understanding of accounting practices and terminology to follow the process and understand its basic components. The guide is essentially structured as an immense checklist, with the steps—scope of work, information collection and cash flow analysis, among others—broken down into their key parts. In each subsection, the author provides a comprehensive list of the major details that should be addressed as well as questions to be answered when the analysis is complete. A recurring caution, which appears in multiple chapters, reminds readers that due diligence is an analysis of facts, not speculation. The author explains that conclusions should be based on solid data, and if the necessary numbers are unavailable, the report should note that reality, as opposed to guessing. Although the book’s title suggests a guide accessible to financial novices, it’s unlikely that readers unacquainted with the general principles and terminology of financial accounting will be able to draw more than a basic comprehension. The author notes that he has made an effort to minimize his use of jargon, but the topic is a specialized one, so readers will find it most useful if they already understand how to read a cash flow statement and calculate net assets without relying on a glossary—since there’s none here—to interpret acronyms like KPI. For those readers, however, the clearly written text and numerous examples add up to a useful addition to the reference shelf.

Not quite an introduction, but a straightforward, detailed guide to a crucial type of financial analysis.