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Financial Due Diligence

Financial Due Diligence
Informed Decision-Making Backed by Accurate Financial Insights

In the context of mergers, acquisitions, and strategic investments, financial due diligence is essential for assessing the financial integrity, performance, and risk exposure of a target entity. CityLinkers provides professional financial due diligence services to assist investors and acquiring entities in making well-informed decisions with confidence.

Our experienced due diligence team delivers objective, thorough evaluations of the target company's financial and operational position, thereby identifying key risks and uncovering value-adding insights.

Scope of Services

CityLinkers’ financial due diligence services cover all critical aspects necessary for comprehensive transaction evaluation:

Financial Statement Analysis

We perform an in-depth analysis of the target company’s financial statements, including:
  • Balance sheet, income statement, and cash flow statement reviews
  • Assessment of financial health, profitability, and liquidity
  • Identification of historical trends, variances, and financial anomalies

Review of Accounting Records

Our team examines the target’s accounting systems and records to ensure compliance with:
  • Hong Kong Financial Reporting Standards (HKFRS)
  • Revenue recognition practices, expense classification, and asset/liability valuation accuracy
  • Identification of any non-standard or inconsistent accounting treatments

Review of Legal and Tax Matters

We evaluate the company’s legal and tax compliance, with particular attention to:
  • Corporate registration documents, shareholder agreements, and regulatory filings
  • Status of profits tax, salaries tax, and stamp duty reporting
  • Identification of tax exposures, underpaid obligations, or unresolved disputes

Review of Key Agreements

We assess the financial implications of major contractual obligations, including:
  • Supplier and customer contracts
  • Loan and financing agreements
  • Lease arrangements and off-balance sheet items
  • Risks associated with long-term commitments

Related Party Transactions

We examine the nature and terms of related-party transactions to ensure:
  • Compliance with transfer pricing requirements
  • Reasonableness of pricing and commercial substance
  • Proper documentation and disclosure of transactions

Site Visits and Asset Verification

Where appropriate, we conduct site visits to:
  • Verify the existence and condition of fixed assets
  • Review inventory levels and valuation methodologies
  • Ensure consistency between operational data and financial reporting

Working Capital Analysis

We analyse working capital to assess operational efficiency and liquidity, focusing on:
  • Turnover ratios for receivables, payables, and inventory
  • Cash flow reliability and adequacy
  • Identification of seasonal or structural working capital constraints

Assessment of Potential Liabilities

We identify financial risks that may not be fully reflected in the financial statements, such as:
  • Unrecorded liabilities or obligations
  • Contingent liabilities, including legal claims and warranties
  • Environmental, regulatory, or compliance-related exposures

Why CityLinkers

CityLinkers offers a professional and structured approach to financial due diligence, supported by:  
  • Experienced Professionals: Our team comprises senior advisors with Big Four backgrounds and extensive M&A experience across multiple jurisdictions and industries.
  • Objective and Independent Assessments: We provide clear, data-driven evaluations to assist clients in pricing decisions and risk mitigation.
  • Regional Expertise: With strong capabilities in Hong Kong, Mainland China, and Asia-Pacific markets, we support cross-border and local transactions with precision and efficiency.
  • Actionable Reporting: Our due diligence reports are concise, insightful, and tailored to the needs of executive decision-makers and investment committees.

Supporting Informed Investment with Confidence

At CityLinkers, we are committed to delivering our clients comprehensive financial insights throughout the M&A process, ensuring clarity, accuracy and reliability. Our financial due diligence services are designed to enhance transparency, reduce transaction risk, and ensure post-deal success.   Should you require further information or wish to discuss how CityLinkers can support your acquisition or investment project, please do not hesitate to contact us.