Financial Due Diligence Presentation Template

The financial due diligence (FDD) presentation is the document that determines whether a transaction proceeds, at what price, and with what adjustments. A well-structured FDD summary gives the buyer's deal team and investment committee the facts they need to make a decision — without burying the material findings in 200 pages of exhibits.

This template covers the standard structure of an FDD summary presentation, whether prepared by a Big Four advisory firm or an internal corporate development team.

Slide 1: Transaction Overview and Engagement Scope

Set context before presenting findings.

Include:

• Target company name and brief description (what the business does, primary markets)
• Transaction structure: asset sale, stock sale, merger, or recapitalization
• Deal economics: purchase price or valuation range, multiples implied (EV/EBITDA, EV/Revenue)
• FDD scope: what periods were analyzed, what workstreams were included (financial, tax, operational), and any limitations on scope (management access, data room restrictions)
• Engagement team: advisor firm and key team members

This slide establishes the credibility and limits of the analysis. Findings that exceed the stated scope are flagged here.

Slide 2: Executive Summary — Key Findings

The executive summary is the most important slide in the FDD presentation. Investment committees often read only this slide before making a go/no-go recommendation.

Structure:

• Quality of Earnings summary: Reported EBITDA vs. Adjusted EBITDA, with net adjustment amount and primary adjustment drivers
• Working capital summary: normalized working capital peg vs. proposed peg, and the financial impact of the difference
• Top 3-5 risks identified, each with a one-sentence characterization and financial impact estimate where quantifiable
• Top 3-5 deal-positive findings (what supports the price or the investment thesis)
• Recommendation or findings summary: does the diligence support proceeding at the proposed price, proceeding with adjustments, or recommending renegotiation?

Slide 3: Quality of Earnings (QoE) — Adjusted EBITDA Bridge

The QoE bridge is the technical heart of the FDD. It reconciles management's reported EBITDA to the diligence-adjusted EBITDA.

Format: A waterfall chart with columns for each adjustment, starting at reported EBITDA and ending at adjusted EBITDA.

Common positive adjustments (additions to EBITDA):

• Excess owner compensation (compensation above market rate for the owner's actual role)
• Non-recurring expenses: legal settlements, one-time restructuring costs, transaction costs
• Personal expenses run through the business (documented with evidence)
• Non-recurring losses: write-offs, insurance claims, COVID relief funds reversed

Common negative adjustments (reductions to EBITDA):

• Below-market related-party transactions (rent, services provided by family members below market cost)
• Non-recurring revenue: one-time government grants, insurance proceeds, asset sales
• Revenue recognition timing issues: shipments pulled forward, contracts recognized before delivery
• Under-accrued expenses: vacation, warranty reserves, maintenance backlog

Net adjustment. State the net adjustment clearly: if management reported $8.2M EBITDA and the diligence-adjusted EBITDA is $7.1M, the $1.1M difference directly impacts the purchase price at the agreed multiple.

Slide 4: Revenue Quality

Acquirers pay different multiples for different quality revenue. Document the revenue composition.

Analyze:

• Revenue by type: recurring subscription, contracted project, time-and-materials, one-time
• Customer concentration: top 5 and top 10 customers as % of revenue, and whether those customers have contracts with renewal terms
• Revenue trend by customer cohort: are existing customers growing, stable, or declining?
• Churn analysis: have any major customers been lost in the past 24 months? What were the reasons?
• Pipeline and backlog: what contracted revenue exists beyond the current period?

Revenue risk flags: Customer concentration above 25% in a single customer, revenue from a customer without a contract, one-time project revenue that management has treated as recurring.

Slide 5: Working Capital Analysis

Working capital determines the actual cash the seller leaves in the business at closing and is often the source of post-closing purchase price disputes.

Analysis structure:

• 13-period trailing working capital by component (accounts receivable, inventory, accounts payable, accrued liabilities)
• Seasonal working capital patterns: is the trailing 12-month average representative, or does the business have seasonal peaks and troughs?
• Normalized working capital peg: the diligence team's recommended target working capital as of closing
• Management's proposed peg vs. the diligence team's recommended peg, and the financial impact of the difference
• Working capital outliers: unusual items in the diligence period that inflate or deflate the peg

The working capital peg negotiation is often the final financial variable resolved before closing. A difference of $500K in the peg translates directly to a $500K difference in the final cash the seller receives.

Slide 6: Key Risks and Findings

Present each material risk with enough specificity that the investment committee can evaluate it.

For each risk:

• Risk description: what is the issue?
• Financial impact: what is the potential effect on EBITDA, working capital, or purchase price? Provide a range where estimable.
• Management's response: how has management addressed or characterized the risk?
• Diligence team's assessment: do you agree with management's characterization, or do you believe the risk is more material?
• Recommended treatment: purchase price adjustment, escrow holdback, indemnity, rep and warranty, or further diligence

Common FDD risks: Revenue recognition disputes, unfunded pension obligations, unpaid payroll taxes, related-party transactions at off-market terms, IT systems that will require post-close investment, customer contracts with change-of-control provisions.

Slide 7: Deal-Positive Findings

Balanced diligence includes findings that support the investment thesis, not only findings that challenge it.

Common deal-positive findings:

• Revenue quality higher than reported (recurring contracts not recognized as such)
• Working capital management tighter than industry peers
• Gross margin improvement trend supported by favorable input cost contracts
• Customer retention higher than disclosed
• Hidden asset value: real estate carried at cost below market value, equipment with remaining useful life longer than book value suggests

Slide 8: Recommended Next Steps

Close with specific recommendations.

Typical next steps:

• Purchase price adjustment recommendation (with amount and rationale)
• Specific indemnification provisions to negotiate
• Additional diligence workstreams recommended before signing (IT, HR, environmental, tax)
• Representations and warranties coverage areas to prioritize
• Timeline recommendation for proceeding to LOI or purchase agreement

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Common FDD Presentation Mistakes

Burying the net adjustment. The adjusted EBITDA number belongs on slide 2, not slide 14. Investment committees need the headline finding immediately.

Listing findings without financial impact. Every material finding should include a dollar impact estimate, even if the range is wide. "Significant risk" without a number is not actionable.

No working capital recommendation. The FDD that does not address the working capital peg leaves the deal team to negotiate blind.

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