Financial Fact Book

A financial factbook is prepared as part of vendor assistance, i.e. to support the seller, and is an important component in the process of selling a company. The financial information of the company being sold is prepared and analyzed. The subject of the analyses is the historical and planned net assets, financial position and results of operations of the company to be sold. An assessment of the appropriateness of the facts presented by the preparer in the report is not made, but the content, validity and completeness are usually checked and confirmed in writing by the management of the target company.

Objective

The aim of a financial factbook is to provide potential investors and lenders with a targeted insight into the business model and the key financial KPIs during the sales process. In addition, an understanding of the most important value drivers for historical and planned growth and the historical and forecast earnings power should be generated. Growth and margin trends in the period under review are also shown and explained. The structured preparation of transaction-relevant information enables potential investors to quickly gain a picture of the net assets, financial position, results of operations and enterprise value. This contributes significantly to an efficient sales process, as the time required to obtain information and coordinate transactions is minimized.

Preparation and content

The preparation of the financial factbook is usually mandated by the potential seller. The extensive analyses and targeted reporting that precede the sales process are based on internal and external company data of the target company, whereby project-specific priorities are usually set. Exemplary, the report can address the following aspects:

Summary of the key performance indicators and other elements of the equity story as well as the key statements of the income statement, balance sheet, cash flow and business plan.
Reporting and explanation of reconciliation and consolidation measures to ensure proper interpretation of summarized financial data.
In-depth analysis of historical financial figures as well as detailed insights into the sales structure, personnel development, working capital, CAPEX and other items relevant to the company and transactions.
Comprehensive analysis and (possibly limited) plausibility check of the integrated business plan, consisting of profit and loss, balance sheet and cash flow planning as well as presentation of the business plan and its assumptions.
Continuous updating based on current financial figures, support of expert sessions with potential investors, preparation of relevant analyses and evaluations as well as support during negotiations.

Advantages of a financial factbook

The main advantage of a financial factbook is the potential increase in efficiency in the M&A process. By preparing the financial information, the process can be accelerated and the use of management resources optimized. In addition, the sales process and negotiations are managed proactively, as the seller gains early knowledge of factors relevant to the transaction and purchase price as well as negotiating leeway.

It should be noted that the financial factbook generally does not include an assessment by the preparer of the appropriateness of the facts presented. If an assessment or evaluation of the available financial figures is desired as part of the sales preparation, a vendor due diligence can also be carried out in contrast to a financial factbook.

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WTS Advisory

Dr. Rainer Doll

Partner Advisory

Friedenstraße 22
81671 München

+4989286462716

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