FDD typical process
FDD process and timeline
The below represents a skeleton timeline for a typical buy-side FDD engagement:
Scoping - Call with the client (i.e. potential acquirer) to discuss scope and their areas of focus.
Information memorandum/Intro call - Review the IM prepared by the sell-side advisers and potentially sit on an introductory call between the client and Target. (Note: do not believe everything you read in the IM, it is not the case that every business is a “market-leader” or “well-positioned for significant growth”).
Information request list - Provide a list of requested financial information from the Target, based on the scope agreed with your client.
Dataroom/Data receipt - Receive the data, normally via a dataroom.
Databook building and question lists - Begin building databooks from the information received and develop a question list (meeting agenda with target CFO/management).
Management meeting - Undertake the meeting with Target management to walkthrough the question list. This is a particularly important part of the process and you should be sure to take as many notes as possible - even a single sentence stated by the Target could have implications on your analysis,
Follow-ups/Report production - Issue the list of follow-up data requests, including those agreed at the Management meeting. Internally agree on the required adjustments and supporting analysis.
Internal review - Internal review process including partners/directors comments, consistency checks, calculation accuracy checks, agreement of report to databook etc.
Draft report delivery and read-out - Delivery of draft report (and potentially supporting tables) to the client.
Report update/finalisation - Include any additional analysis requested by the client and sign the report for final delivery.
All you need to know
The below information pack (60+ page document with accompanying example Excel databook) will benefit any individual looking into a potential move into the financial due diligence profession (often referred to as transaction services or transaction advisory services in the market). The information pack will prove useful for potential interview questions or even simply establishing a general understanding of the typical financial due diligence thought-process.
The pack will also be beneficial for any already successful FDD candidate who is looking to acquire a strong technical understanding in order to hit the ground running.
FDD Interview Preparation Pack and Example Excel Databook
Complete FDD (Transaction Services) interview preparation pack (60+ page document + example Excel databook). Insights into the FDD process and detailed technical examples covering all three key FDD workstreams: Quality of Earnings, Net Debt and Net Working Capital.
Candidate feedback on the interview preparation pack:
“I have passed my interview as a consultant in corporate finance. I was asked to prepare the "clean" EBITDA and Working capital. The information pack helped me a lot!” - H Yue, May 2023
“Informative and to the point, gave me the confidence I needed.” - Harkirat K, November 2022
I was able to secure 2 full time offers from my interviews for TAS roles while reviewing the course pack. Most of the recruiters / managers interviewed with were impressed that I had a baseline understanding of FDD coming from an audit background at a big 4" - Jose V, August 2022