A Strong Deal Requires More Than Interest. It Requires Verification.
A potential buyer may be attracted by market position, revenue growth, EBITDA, assets, customer relationships, licenses, technology, or strategic fit. Before a transaction can move toward SPA negotiation or closing, every material assumption must be tested.
Is financial performance sustainable?
Are revenue, margins, EBITDA, assets, debts, and working capital reliable?
Are there hidden liabilities, tax exposures, disputes, related-party transactions, or compliance issues?
Are contracts, licenses, employees, systems, IP, and operations transferable after closing?
Does the target support the valuation and deal structure proposed in the LOI?
What SPA protections should be reflected through warranties, indemnities, conditions precedent, price adjustments, or earn-outs?
Comprehensive Due Diligence for Strategic M&A Success
TVC’s review process supports buyer-side decision-making and seller-side transaction readiness across financial, tax, legal, commercial, operational, HR, IT, compliance, and cross-border regulatory workstreams.
Validate performance and value
Financial Due Diligence
Financial due diligence examines whether the target company's financial statements accurately reflect historical performance, current condition, and future earning capacity. TVC reviews financial statements, tax filings, and compliance documentation to identify risks and tailor solutions according to the client’s industry and transaction requirements.
What We Review
Historical revenue, gross profit, EBITDA, operating profit, net profit, cash flow, and performance trends
Quality of earnings, non-recurring income, one-time expenses, owner-related costs, related-party transactions, and EBITDA normalization
Revenue by customer, product, service line, geography, channel, seasonality, and recurring versus non-recurring nature
Gross margin, direct costs, supplier dependency, inventory cost, labor cost, logistics, manufacturing, and service delivery cost
Working capital, accounts receivable, inventory, accounts payable, deferred revenue, accrued expenses, and closing adjustment basis
Debt, net debt, leases, guarantees, accrued interest, off-balance-sheet liabilities, and contingent obligations
Forecast reasonableness and valuation impact through EBITDA multiples, CCA, NAV, DCF, and earnings power value
Typical Output
Our Due Diligence Process
Transaction Context
Understand structure, objectives, LOI terms, exclusivity, valuation basis, industry, jurisdiction, and timeline.
Scope Definition
Define scope based on transaction size, buyer requirements, seller readiness, risk profile, and available documents.
Document Request
Prepare financial, tax, legal, commercial, HR, operational, IT, compliance, and transaction-specific request lists.
Data Room Review
Support document organization, review available materials, identify information gaps, and prepare clean data rooms.
Management Q&A
Manage structured Q&A with management, advisors, accountants, lawyers, and operational teams.
Risk Analysis
Classify issues by severity, deal impact, valuation impact, required action, and negotiation priority.
Valuation Impact
Assess enterprise value, equity value, working capital, net debt, earn-out, indemnity, holdback, and closing terms.
Report & Negotiation
Prepare reports, red flag memos, and issue lists, then support negotiation of final terms.
SPA / DA Coordination
Translate findings into warranties, indemnities, covenants, price adjustments, and conditions precedent.
Closing Support
Support closing documentation, registration, post-closing action items, and PMI risk management where required.
Due Diligence Across Key M&A Sectors
TVC supports due diligence across a wide range of industries, with review scopes adapted to business model, transaction structure, jurisdiction, and sector-specific risk.
Manufacturing
Capacity, inventory, equipment, quality control, supplier dependency, environmental compliance.
Technology & SaaS
Recurring revenue, churn, source code ownership, cybersecurity, scalability, customer contracts.
Healthcare & Medical
Permits, regulatory compliance, patient data, professional licenses, reimbursement exposure.
Logistics
Fleet, licenses, customer concentration, route profitability, fuel cost exposure, warehouse contracts.
Finance & Investment
Regulatory status, controls, portfolio quality, financial reporting, client concentration.
Real Estate
Title, lease agreements, zoning, encumbrances, asset ownership, environmental risk.
Food & Beverage
Licenses, supplier quality, brand strength, franchise contracts, food safety compliance.
Consumer & Retail
Customer loyalty, channel economics, inventory, leases, brand strength, supplier reliance.
Due Diligence Deliverables
Depending on the scope of engagement, TVC may provide reports, schedules, memo-style outputs, risk matrices, SPA issue lists, and post-closing action plans.
How We Classify Due Diligence Findings
To help clients make clear decisions, TVC classifies findings according to transaction impact.
Critical Risk
Issues that may prevent the transaction from closing or require major price, structure, or legal protection changes.
Ownership dispute, major undisclosed debt, regulatory non-compliance, material litigation, unreliable financial statements, serious tax exposure.
High Risk
Issues that may materially affect valuation, closing conditions, SPA protection, or post-closing integration.
Customer concentration, EBITDA overstatement, change-of-control termination risk, key license dependency, unresolved labor claims.
Medium Risk
Issues that require clarification, negotiation, adjustment, or post-closing action but may not block the transaction.
Documentation gaps, minor tax inconsistency, outdated HR policy, weak internal controls.
Low Risk
Issues that should be documented but are unlikely to materially affect deal value or closing.
Administrative corrections, minor contract updates, incomplete non-critical records.
Why Tokyo Venture Capital for Due Diligence?
TVC combines M&A advisory, financial review, valuation, legal coordination, tax support, translation, and cross-border execution into one integrated process. Our value is not only in finding issues, but in helping clients understand what each issue means for valuation, negotiation, closing, and post-closing success.
Frequently Asked Questions (FAQs)
Prepare before buyers find the issues.
What is seller-side due diligence?
Seller-side due diligence helps the seller prepare documents, identify issues early, improve buyer confidence, and reduce the risk of price reduction or delay during buyer review.