Sample interview questions: How do you approach financial due diligence for potential business partnerships?
Sample answer:
Approaching Financial DueDiligence for Business Partnerships
1. Plan and Preparation:
- Assemble a team: Involve legal counsel, auditors, and other relevant professionals.
- Set a clear due diligence schedule: Allow sufficient time for thorough analysis.
- Communicate expectations: Outline the scope of the due diligence and the information required.
2. Gather and Validate Financial Data:
- Income statements, balance sheets, and cash flow statements: Review historical financial performance and identify trends.
- Vendor and customer contracts: Verify revenue and expense streams.
- Tax returns and financial statements: Assess compliance and accuracy.
- Contingent liabilities: Evaluate potential liabilities not reflected in the financial statements.
3. Evaluate Financial Position and Liquidity:
- Solvability: Assess the company’s ability to meet its obligations.
- Profitability: Measure the company’s revenue-generating capabilities and profit generation.
- Liquidity: Evaluate the availability of cash and ability to meet short-term financial needs.
4. Assess Business Model and Strategy:
- Industry and market analysis: Understand the competitive… Read full answer