”Low informative value of Ukrainian financial statements impedes an accurate appraisal of a company’s profitability. Our experts will provide you with transparent information about your target’s financial performance and will reliably identify potential deal breakers.”
Our definition: Financial Due Diligence
We give buyers a better in-depth understanding of the target business by analysing and validating the target’s financial performance.
Local characteristics: Low informative value of Ukrainian financial statements
In most cases Ukrainian financial statements are insufficient to conduct a valid Financial Due Diligence.
The reason for this is two-fold: First of all, in Ukraine hardly any company publishes financial statements using international accounting standards. Secondly, Ukrainian financial statements usually only provide a blurred picture, not reflecting the actual financial situation of a company.
This can be explained by taking a closer look at the Ukrainian accounting system, where tax minimization is a major driver. Thus, the local companies have no incentive to depict their actual financial performance.
Besides, for the majority of Ukrainian companies (TOVs) an obligatory audit does not exist, which leads to further neglect of commercial accounting.
Even though financial reports are required to be handed in to the Ukrainian authorities, the figures are usually not checked for validity.
Moreover, before introduction of the new tax code in April 2011, commercial accounting substantially differed from tax accounting. The principle that the tax accounting is to be based on commercial accounting was not applied.
Our solution: Thorough analysis and transparent illustration of the financial performance and on-site evaluation of tangible assets
Our experts will analyse the P&L and the balance sheet of your target company and identify potential opportunities or threats. This involves complementing and commenting on the Ukrainian financial statements so that you will receive a valid appraisal of the target’s actual financial performance giving you a comprehensive understanding of potential deal breakers and a realistic overview of the target’s financial situation.
In addition, industry specific experts visit the target company and asses the value of tangible assets in order to ensure that a fair value is shown on the balance sheet.
Intangible assets and contractual rights are assessed by partner law firms.
