Financial due diligence for investment and expansion in Ethiopia

Translate local records into decision-useful evidence

A financial due-diligence workstream should help the decision-maker understand the reliability of reported performance, the cash and working-capital profile, significant obligations and the quality of the underlying finance process. It should not be treated as a substitute for legal, tax, technical or regulatory due diligence.

The starting point is a reconciled information set: financial statements, trial balances, management accounts, tax records where authorised, bank information, major contracts and supporting schedules for material balances.

• Historical earnings and unusual items
• Revenue concentration and cut-off
• Working capital and cash conversion
• Debt, commitments and contingent exposures
• Related-party balances and transactions
• Reporting systems and internal controls

Questions that affect transaction structure

Differences between statutory records, management reporting and transaction assumptions should be identified and explained. The purpose is not merely to list discrepancies, but to assess how they affect valuation, completion mechanics, post-acquisition priorities or the need for further specialist review.

Define scope before sharing confidential records

Before documents are exchanged, the parties should agree the target entity, decision, period, access protocol, reliance limitations and required outputs. Sensitive information should be transferred through an approved secure channel, with access restricted to the engagement team.

• Non-confidential initial scope
• Verified counterparties and authority
• Conflict and acceptance procedures
• Secure data-room or controlled portal
• Clear findings, limitations and next actions