Financial screening for deal teams

A pre-QoE screen helps a deal team decide whether a target merits deeper financial diligence. Its purpose is to organize available evidence, identify questions, and make information gaps explicit. It is not an audit, review, or CPA assurance engagement.

Begin by recording the target, analysis period, source files, and the business question. A screen built from a partial ledger should not imply that all bank activity, contractual exposure, or customer relationships have been examined.

The decision at the end of a screen is usually one of three: walk away, proceed to a letter of intent with specific conditions, or commission a full QoE. The screen should make that choice easier by naming what would have to be true for each.

Addback applies ten checks: EBITDA and addback candidates, revenue quality, customer concentration, working capital, cash proof, margin analysis, anomalies, related-party exposure, change-of-control exposure, and data completeness.

These checks depend on the evidence supplied. Structured spreadsheets and accounting exports support financial calculations. Bank and contract screening may draw on supporting document text. A missing source limits what can be assessed.

Unknown and zero are different states. If a check lacks sufficient support, mark it not assessable and explain which record would resolve the gap. Do not substitute an estimate merely to produce a complete-looking report.

The minimum file set for a useful screen

• Annual statements for the analysis period and the trailing twelve months.
• A general ledger export or monthly trial balances.
• Revenue by customer, if the business has any concentration at all.
• Bank statements for the main operating account, if a cash check is wanted.
• Management's addback schedule, so the screen tests their claims rather than guessing at them.

A candidate adjustment is a request for review. An unusual expense may be non-recurring, normal for the business, or simply described poorly in the ledger. The reviewer must establish the context before accepting an EBITDA adjustment.

Keep each material finding connected to its source file and row. Where a document supports the analysis, retain enough location information for a reviewer to find the relevant passage. A summary without a reviewable source is not a substitute for evidence.

Review earnings, cash, and working capital together. A positive earnings trend can coexist with weak collections, unusual accruals, or a changing working capital requirement. Screening is a way to identify those relationships for follow-up.

Record the next action alongside the finding: request a reconciliation, obtain missing statements, discuss an adjustment with management, or expand the analysis period. Useful screening produces a focused diligence agenda.

When the target merits deeper work, choose a scoped CPA-led Advisory engagement or continue with your own team in Finsider Platform. Preserve the screen as an initial evidence record, not as a final transaction opinion.

Use the screen to write the QoE scope. The checks that were not assessable become the first items on the request list; the candidate adjustments become the first items on the review list; the concentration and contract questions set the revenue procedures.

This Finsider Labs methodology note proposes a practical review framework. It does not report a benchmark, measured improvement, or assurance conclusion. Its usefulness depends on the completeness of the records and the quality of professional review.