When you buy a company in Malaysia, you’re not just buying its brand or assets. You’re also buying its hidden financial baggage. That’s why financial due diligence (FDD) is not an option … it’s a must.

Many SME bosses think audited accounts are enough. But audits are not designed to protect buyers. Due diligence is.

FDD is a deep financial health check of the target company. It looks beyond surface numbers to uncover risks that affect valuation and future profitability.

Key areas include:

1. Financial review : Checking balance sheets, cash flow, off-balance sheet liabilities, and unusual expenses.
2. Tax review : Ensuring no hidden LHDN issues, unpaid taxes, or pending disputes.
3. Earnings quality : Testing whether profits are sustainable or inflated by one-off gains.
4. Capital structure : Understanding debt covenants, repayment obligations, and shareholder arrangements.
5. Red flags : Aggressive accounting, aging receivables, customer over-reliance, or related-party transactions.

The final due diligence report is more than paperwork. It’s a negotiation tool to adjust price, demand warranties, or structure protections like escrow.

For SME buyers, one hidden liability can wipe out years of profit. Financial due diligence reduces that risk and gives confidence that the deal you’re signing is the deal you’re truly getting.

Read the full content in our blog
https://lnkd.in/gMWu5CS5