Due Diligence P&L – Exhaustive Revenue and Costs Analysis Template

Model for in depth understanding of high level P&L and Revenue Analysis. Big-4 like book of due diligence analyses.

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This P&L financial due diligence model is focused on full exhaustive P&L analysis both on the Revenue and the Cost side. It represents several days of work and is directly based on 5 intensive years of experience as part of a Big 4 transaction Due Diligence team + over 2 years of work in highly demanding Private Equity Investment jobs.

This due diligence model is perfectly suitable for an M&A (merger & acquisition) process, but can also greatly help any financial analyst or CFO better understand the overall P&L, revenue, and cost trends of a company.
All the analyses included in this comprehensive model are as follows :

– Overview of P&L, variations, and KPIs (Key Performance Indicators)
– Revenue bridge (by product, or channel, or geography, etc.)
– EBITDA bridge (by type of cost)
– Current Year Trading (ie. analysis of the current fiscal year vs. the same period in previous years)
– Current Year Outturn (ie. Year to Date, Year to go vs. budget compared to previous years)
– Budget Accuracy (ie. how accurate was management at budgeting in previous years)
– Constant Currency Analysis
– Analysis of Transaction effect vs. Translation effect
– Impact of Hedging on revenue
– Revenue Seasonality
– Revenue Concentration
– Revenue Mix
– Revenue growth (Month over month, Quarter over Quarter, Rolling LTM, L6M, L3M, and comparison of the month vs. same month last year)
– Impact of accrual revenue vs. cash accounting (ie. impact of deferred revenue)
– Refunds review (ie. how refunds have moved over the years)
– Discount and Rebates (ie. how discounts and rebates have changed over the years + discount and rebated per main customers)
– Dashboard of Variation of Revenue, price, and volume per product for each year
– Full Price Volume Mix analysis including impact on Gross Profit Margin of new products (if you are interested only in this part, I also sell the PVM model on a standalone)
– Customer count Churn bridge and average monthly churn rate
– Monthly Recurring Revenue (MRR) bridge (ie, the impact of the upgrade, downgrade, new and churn customers)
– Cohort analysis and Revenue retention % profile by year of onboarding
– Advanced revenue analysis by vintage (ie. analysis of revenue generated by customers based on their year of onboarding and based on the year they churned.
– Revenue ramp-up by new customers
– Revenue ramp-up by new product
– Like for Like analysis (ie. analysis of the trend of a “core” category of product or of revenue-generating assets, like a portfolio of boutiques for instance)
– Recurring revenue vs. One-off
– Monthly plans vs. Annual plans
– Pipeline and Backlog analysis
– Contract Renewal Dates
– Average revenue per client
– Evolution of Mix of customers by price plan by year
– Lifetime Value per client per date of onboarding (ie. how much revenue each client generated from his date of onboarding)
– Price elasticity
– COGS breakdown
– Raw Material price analysis
– Suppliers concentration
– GP by product
– Bubble Chart to analyze Rev and GP by product/department etc.
– Opex overview
– Fixed vs. Variable costs analysis
– Team Organigramme
– Employee costs breakdown
– Employee costs per department
– Staff Turnover and aging
– Revenue per relevant FTE per department
– Lease analysis
– Marketing costs breakdown
– Marketing & lead conversion
– Other Opex breakdown

Overall, this model should be seen as an exhaustive M&A due diligence playbook that you can use and apply to your own specific situation, twisting the analyses to fit your particular needs and deep-diving into the most relevant ones. In any case, it will provide any financial analyst doing M&A due diligence with a clear step-by-step approach of all the usual revenue & cost analyses that can be performed on a company.

This model is the support to a fully online course that I have created on how to perform Financial Due Diligence. If you are interested in learning more, please feel free to reach out by email.

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