The impact of financial and tax due diligence on the valuation of transaction and the SPA

Abstract

Financial and tax due diligence is one of the most important processes in the M&A (Mergers and Acquisitions) phases, capable of influencing the continuity of the transaction and the terms under which it will be carried out. Additionally, its importance extends to the period after the transaction where a bad due diligence can lead to unwelcoming surprises. By including a quantitative element that provides insight into the impact that is not well understood in the literature, the study seeks to investigate how financial and tax due diligence is carried out and how this affects the pricing, the financial model, and the SPA. The study was conducted through an analysis of a case study of financial and tax due diligence of a transaction involving the acquisition of two companies. The findings provide a number of significant details regarding adjustments related to EBITDA, working capital, net debt, and tax risks. Additionally, the due diligence team made recommendations for the buyer to incorporate into the SPA.

Date of Award	7 Jul 2025
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Sandra Correia (Supervisor)