P&L Due Diligence - Exhaustive Revenue Analysis model
Originally published: 08/02/2021 08:01
Last version published: 08/02/2021 16:22
Publication number: ELQ-29798-3
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P&L Due Diligence - Exhaustive Revenue Analysis model

Model for in depth understanding of high level P&L and Revenue Analysis. Big-4 like book of due diligence analyses.

* *** Model is fully unlocked! *****

This P&L financial due diligence model is focused on P&L high level analysis and on exhaustive analysis of revenue. It represents several days of work and is directly based on 5 intensive years of experience as part of a Big 4 transaction Due Diligence team.

This due diligence model is perfectly suitable for a M&A (merger & acquisition) process, but can also greatly help any financial analyst or CFO better understand the overall P&L trend and revenue trend of a company.
All the analyses included in this comprehensive model are as follows :

- Overview of P&L, variations and KPIs (Key Performance Indicators)
- Revenue bridge (by product, or channel, or geography etc.)
- EBITDA bridge (by type of cost)
- Current Year Trading (ie. analysis of the current fiscal year vs. same period in previous years)
- Current Year Outturn (ie. Year to Date, Year to go vs. budget compared to previous years)
- Budget Accuracy (ie. how accurate was management at budgeting in previous years)
- Constant Currency Analysis
- Analysis of Transaction effect vs. Translation effect
- Impact of Hedging on revenue
- Revenue Seasonality
- Revenue Concentration
- Revenue Mix
- Revenue growth (Month over month, Quarter over Quarter, Rolling LTM, L6M, L3M, and comparison of month vs. same month last year)
- Impact of accrual revenue vs. cash accounting (ie. impact of deferred revenue)
- Refunds review (ie. how refunds have moved over the years)
- Discount and Rebates (ie. how discounts and rebates have changed over the years + discount and rebated per main customers)
- Dashboard of Variation of Revenue, price and volume per product for each year
- Full Price Volume Mix analysis including impact on Gross Profit Margin of new products (if you are interested only in this part, I also sell the PVM model on a standalone)
- Customer count Churn bridge and average monthly churn rate
- Monthly Recurring Revenue (MRR) bridge (ie, impact of upgrade, downgrade, new and churn customers)
- Cohort analysis and Revenue retention % profile by year of onboarding
- Advanced revenue analysis by vintage (ie. analysis of revenue generated by customers based on their year of onboarding and based on the year they churned.
- Revenue ramp-up by new customers
- Revenue ramp-up by new product
- Like for Like analysis (ie. analysis of the trend of a "core" category of product or of revenue generating assets, like a portfolio of boutiques for instance)
- Recurring revenue vs. One-off
- Monthly plans vs. Annual plans
- Pipeline and Backlog analysis
- Contract Renewal Dates
- Average revenue per client
- Evolution of Mix of customers by price plan by year
- Lifetime Value per client per date of onboarding (ie. how much revenue each client generated from his date of onboarding)
- Price elasticity

Overall, this model should be seen as an exhaustive M&A due diligence playbook that you can use and apply to your own specific situation, twisting the analyses to fit your particular needs and deep diving in the most relevant ones. In any case, it will provide any financial analyst doing M&A due diligence with a clear step by step approach of all the revenue analyses that can be performed on a company.

This model is the support to a full online course that I have created on how to perform Financial Due Diligence. If you are interested in learning more, please feel free to reach out by DM or by email.

This Best Practice includes
1 Excel file, over 50 tabs

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Further information

Give an objective playbook for anyone looking to perform due diligence on the top line of a business under M&A process

CFO looking to better understand revenue. Investor looking to analyse a target. Transaction Services professional performing Financial Due Diligence

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