Financial Statement Analysis for M&A Due Diligence
Extract, normalize, and analyze financial statements to identify M&A risks and valuation drivers
What You Can Do
You can extract and analyze multi-year financial statements (income statements, balance sheets, cash flow statements) to identify discontinuities, related-party transactions, and accounting policy changes. The skill guides you through normalizing GAAP earnings for valuation models, quantifying working capital adjustments, documenting earn-out conditions, and preparing comprehensive findings for investment committee presentations and LOI support.
Features
systematically pull data from 3-5 years of target financials to identify trends and anomalies
adjust GAAP earnings for one-time items, related-party transactions, and non-recurring charges to calculate normalized EBITDA
detect accounting policy changes, aggressive revenue recognition, unusual accruals, and expense timing shifts
quantify net working capital adjustments, accounts receivable aging, inventory reserves, and payables normalization
analyze capex patterns, asset age, maintenance vs. growth spending, and cash conversion efficiency
extract and quantify key metrics (margins, returns, growth rates) that drive purchase price multiples
estimate impact of identified issues on valuation, funding, and post-acquisition integration
structure findings, schedules, and recommendations for senior management review and decision-making
Example Output
Example 1: Revenue Red Flag Identification
- Target shows 25% YoY revenue growth but accounts receivable increased 40% while DSO rose from 35 to 52 days
- One customer (15% of revenue) changed payment terms from Net 30 to Net 60 in Q4—not disclosed in footnotes
- Risk: Revenue quality concern; $2.1M of the $5M growth is timing-driven, not organic
Example 2: EBITDA Normalization Schedule
- GAAP Net Income: $8.5M
- Add: D&A: $3.2M
- Add: Stock-based comp (non-recurring): $1.1M
- Add: CEO severance (one-time): $0.9M
- Less: Intercompany service fees at above-market rates: ($0.6M)
- Normalized EBITDA: $13.1M vs. reported $11.8M (11% uplift)
Example 3: Working Capital Adjustment
- Current ratio deteriorated from 1.8x to 1.2x; inventory reserve policy changed mid-year
- AP aging extended 20 days coinciding with new vendor agreements
- Estimated working capital cash outlay at close: $2.8M (versus $1.1M historical average)
What's Included
- SKILL.md: step-by-step instruction file for financial statement extraction and analysis workflow
- Multi-year Analysis Template: structured workbook for capturing 3-5 years of statement data with automated variance analysis
- Earnings Normalization Schedule: pre-built framework for GAAP-to-normalized adjustments with common M&A add-back categories
- Red Flag Checklist: systematic review guide covering revenue recognition, expense timing, related-party transactions, and accounting changes
- Working Capital & Adjustment Calculator: tools for quantifying NWC, capex, and deal-specific adjustments for purchase price allocation
Who It's For
- M&A Analysts — conducting financial due diligence on buy-side or sell-side transactions
- Investment Committee Members — reviewing financial findings and deal risks before LOI or close
- Corporate Development Professionals — validating acquisition targets during evaluation phase
- Private Equity Associates — supporting senior deal teams with financial statement analysis and normalization work
- CFO/Finance Teams — preparing financial due diligence packages for strategic or financial buyers
Best For
- Multi-period financial analysis — extracting and comparing 3-5 years of audited and unaudited statements
- Earnings normalization — adjusting GAAP metrics for one-time items, related-party transactions, and policy changes
- Anomaly detection — identifying discontinuities in revenue quality, receivables aging, margin trends, and accruals
- Working capital quantification — calculating adjustments for inventory reserves, receivables, payables, and other balance sheet items
- Deal risk documentation — structuring findings for management presentations and valuation model impact analysis
You might also like
You can design culturally appropriate survey instruments tailored to international development contexts, analyze mixed-methods data by integrating quantitative findings with qualitative insights, and implement robust data quality management systems for your field operations. Claude helps you create survey templates with adaptive logic, develop validation protocols, and produce data quality reports that highlight issues before analysis begins.
by skillslib
Prepare comprehensive expert witness reports and testimony that meet Daubert standards for admissibility and withstand cross-examination scrutiny. You'll get structured case analyses integrating psychological assessments, relevant case law citations, and anticipated counterarguments. The skill helps you document your forensic opinions with the legal rigor required in criminal, civil, and family law proceedings.
by skillslib
You can systematically evaluate architectural options by building decision matrices, identifying trade-offs, and documenting design rationale. This skill generates comparison frameworks, risk assessments, and architecture decision records (ADRs) that help you choose between competing approaches based on concrete criteria like performance, scalability, cost, and team capabilities.
by skillslib
You provide a single core insight or perspective, and this skill transforms it into a complete, coordinated thought leadership content suite across every major channel. It generates optimized articles, social threads, email sequences, presentation outlines, and more—all reinforcing the same core message while adapting to each platform's unique audience and format. Every piece maintains strategic consistency while maximizing reach and engagement.
by skillslib
Analyze commercial insurance applications by extracting risk factors, evaluating loss history and industry exposure, and generating structured underwriting recommendations with standardized documentation. You'll reduce review time per application, ensure consistent decision criteria across your team, and maintain compliant audit trails for every underwriting action.
by skillslib
You can convert raw discovery call notes into polished, multi-section sales proposals that include executive summaries tailored to buyer personas, needs analysis mapped to your solution architecture, tiered pricing options with competitive positioning, ROI projections with financial justification, and realistic implementation timelines. The skill preserves personalization and strategic positioning while automating structural components, letting you respond to RFPs and time-sensitive opportunities without sacrificing quality or consistency.
by skillslib
This skill analyzes property damage claims to identify viable subrogation opportunities against third-party defendants. It quantifies recovery potential using liability assessment, damages analysis, and comparable settlement benchmarks—then develops negotiation-backed strategies to maximize your recovery. The skill guides you through intake, documentation, negotiation, and settlement workflows to transform claims into recoveries.
by skillslib
Turn project descriptions, timelines, and structured data into professional draw.io diagrams instantly. You can generate flowcharts, org charts, Gantt charts, swimlane diagrams, and process flows by describing what you need. Claude creates draw.io XML that you can open directly in the editor or modify further.
by skillslib