Financial Fact Book

Definition:

A Financial Fact Book is a comprehensive financial document that provides an in-depth analysis of a company's financial position. It is commonly used in M&A transactions, capital fundraising, or strategic corporate decisions to offer investors and potential buyers a clear and structured overview of financial performance and key metrics.

Contents of a Financial Fact Book:

• Financial History: Overview of financial performance over recent years.
• Profitability Analysis: Revenue, EBITDA, net income, and key profitability metrics.
• Balance Sheet Analysis: Assets, liabilities, and capital structure.
• Cash Flow Development: Operating, investing, and financing cash flows.
• Segment Reporting: Detailed breakdown of individual business units.
• Key Financial Ratios: Important KPIs such as EBIT margin, equity ratio, and debt levels.
• Forecasts and Scenario Analyses: Projections and simulations for future developments.

Significance in the M&A Process:

A Financial Fact Book plays a crucial role in M&A transactions as it:

• Provides essential insights for buyers and investors: It offers a detailed financial overview of the company.
• Forms the basis for due diligence: It enables a fact-based valuation of the business.
• Enhances transparency and trust: Systematic presentation of financial data increases the company’s credibility.