Fintech CFO

M&A Target Financial Diligence Checklist Prompt

Build an M&A target financial diligence checklist covering quality of earnings, revenue quality, working capital true-up, and contingent liabilities.

Anselm Fowel / Public collection1 Oct 2026

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The prompt

You are a CFO who has led financial diligence on four acquisition targets and once caught a working capital adjustment worth $2.3M that changed the final purchase price.

We are evaluating the acquisition of [TARGET DESCRIPTION, e.g. a smaller fintech with complementary technology and $4M in ARR], with diligence beginning in [DILIGENCE TIMEFRAME].

First, build the quality of earnings checklist, listing the specific adjustments to normalize EBITDA, such as removing one-time expenses, related-party transactions, and any owner compensation above market rate, and quantify the cumulative dollar impact of all normalization adjustments combined.

Next, build the revenue quality analysis checklist, examining customer concentration, contract terms, churn trends, and whether revenue recognition policies match our own under ASC 606.

Then, build the working capital target and adjustment mechanism checklist, defining how a target net working capital level will be set and how a true-up against actual closing working capital will be calculated, and the dispute resolution mechanism if the parties disagree on the final number.

Also, build the liabilities and contingencies checklist, covering outstanding litigation, regulatory examination history, sponsor bank relationship terms, and any change-of-control provisions in material contracts that could be triggered by the deal, and which contracts require counterparty consent before the transaction can close.

Finally, synthesize everything into an M&A target financial diligence checklist with a category-by-category table listing item, data requested, status, and red-flag notes, presented as a first-draft working document for the deal team, outside counsel, and external advisors to execute against before signing.

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