Financial Due Diligence Analyzer

Performs detailed financial due diligence on deals by analyzing earnings quality, working capital, revenue, liabilities, cash flow, red flags, and valuation...

Security Scan

An instruction-only due-diligence guide that is internally consistent with its stated purpose and does not request additional credentials, installs, or suspicious actions.

Purpose & Capability

Name, description, and provided checklists/outputs align with a financial due-diligence tool; nothing in the manifest asks for unrelated capabilities (no cloud creds, no binaries, no unusual config paths).

Instruction Scope

SKILL.md confines the agent to analyzing user-supplied financials and deal terms and producing a structured report; it does not instruct the agent to read system files, gather environment variables, or transmit data to unknown endpoints. Note: the skill expects users to provide potentially sensitive financial documents, which is normal for this use case but a privacy consideration.

Install Mechanism

Instruction-only skill with no install spec and no code files — lowest-risk installation surface (nothing written to disk by the skill itself).

Credentials

No environment variables, credentials, or config paths are requested; required access is proportional to the stated purpose (analysis of provided financial inputs).

Persistence & Privilege

Skill is not always:on, does not request persistent system-level presence, and uses the platform's normal autonomous-invocation default without combining that with broad access.

Assessment

This skill is coherent and appears to do what it claims, but before using it: 1) Only provide financial documents to agents/services you trust and that meet your confidentiality requirements; 2) Test the skill with non-sensitive sample data first to verify output format and assumptions; 3) Treat its findings as advisory — have a qualified human reviewer validate adjustments, valuations, and negotiation points; and 4) If you plan to use this in production, confirm the vendor/author (AfrexAI links) and their data-handling/privacy practices.

Run comprehensive financial due diligence on acquisition targets, investment opportunities, or partnership prospects. Built for PE firms, corporate development teams, and founders evaluating deals.

What This Does

Generates a complete due diligence package:

• Quality of Earnings (QoE) — normalize EBITDA, strip one-time items, identify recurring vs non-recurring revenue
• Working Capital Analysis — NWC trends, peg calculation, seasonal adjustments
• Revenue Quality — customer concentration, churn, cohort analysis, contract backlog
• Debt & Liabilities — hidden obligations, off-balance-sheet items, contingent liabilities
• Cash Flow Bridge — EBITDA to free cash flow conversion, capex requirements
• Red Flag Scanner — 23 common deal-killers ranked by severity

How to Use

Tell your agent: "Run financial due diligence on [company/deal]"

Provide what you have:

• Financial statements (P&L, balance sheet, cash flow) — even partial
• Revenue breakdown by customer/product
• Known deal terms (purchase price, structure)

The agent will generate a structured diligence report with findings, risks, and negotiation points.

QoE Framework

EBITDA Normalization Checklist

Adjustment Category	Common Items	Direction
Owner compensation	Above/below market salary, personal expenses	+/-
One-time revenue	PPP loans, insurance claims, litigation settlements	-
One-time expenses	Restructuring, M&A costs, natural disaster	+
Related party	Above/below market rent, intercompany charges	+/-
Accounting changes	Revenue recognition timing, reserve adjustments	+/-
Run-rate adjustments	New contracts, lost customers, price changes	+/-

Revenue Quality Score (0-100)

Factor	Weight	Scoring
Recurring vs one-time	25%	>80% recurring = 25, >60% = 18, >40% = 12, <40% = 5
Customer concentration	20%	Top customer <10% = 20, <20% = 15, <30% = 10, >30% = 3
Retention rate	20%	>95% = 20, >90% = 15, >85% = 10, <85% = 5
Contract backlog	15%	>12mo coverage = 15, >6mo = 10, >3mo = 6, <3mo = 2
Growth trajectory	10%	>30% YoY = 10, >15% = 7, >5% = 4, declining = 1
Pricing power	10%	Annual increases + low churn = 10, some = 6, none = 2

Working Capital Peg

NWC Peg = Average of trailing 12 months normalized NWC

Normalized NWC = Current Assets (excl. cash) - Current Liabilities (excl. debt)

Adjustments:
- Remove seasonal spikes (use monthly data, not quarterly)
- Strip one-time receivables/payables
- Normalize inventory to steady-state
- Adjust for known post-close changes

If NWC at close > Peg → Seller receives difference
If NWC at close < Peg → Buyer receives difference

Red Flag Scanner (23 Points)

Critical (Deal-killers)

1. Revenue concentration >40% single customer
2. Declining revenue with no credible turnaround plan
3. Negative or deteriorating cash conversion (EBITDA to FCF <50%)
4. Undisclosed litigation or regulatory action
5. Key person dependency with no succession plan
6. Material related-party transactions at off-market terms
7. Unrecorded liabilities (tax, environmental, legal)

Serious (Price adjustments)

8. Customer churn accelerating quarter-over-quarter
9. Gross margin compression >200bps annually
10. Capex requirements understated (deferred maintenance)
11. Working capital trends moving against buyer
12. Aggressive revenue recognition policies
13. Unusual pre-close transactions (dividends, bonuses)
14. Technology debt requiring material investment
15. Regulatory changes threatening core business model

Notable (Negotiation points)

16. Management team retention risk
17. Vendor concentration >30% single supplier
18. IP ownership gaps or licensing dependencies
19. Insurance coverage gaps
20. Environmental liabilities (real estate)
21. Employee benefit obligations (pension, OPEB)
22. Tax position optimization opportunities
23. Integration complexity indicators

Valuation Sanity Check

Quick Multiples Reference (2025-2026)

Sector	EV/Revenue	EV/EBITDA	Notes
SaaS (<$10M ARR)	4-8x	15-25x	Higher for >120% NRR
SaaS ($10-50M ARR)	6-12x	20-35x	Rule of 40 premium
Professional Services	1-2x	8-12x	People-dependent discount
Manufacturing	0.5-1.5x	6-10x	Asset-heavy adjustment
Healthcare Services	1-3x	10-15x	Regulatory moat premium
Fintech	5-15x	20-40x	Wide range, growth-dependent
E-commerce	1-3x	10-18x	Brand and margin quality

Purchase Price Allocation

Enterprise Value
- Net Debt (total debt - cash)
- Transaction Expenses
- Working Capital Adjustment (vs Peg)
+ Earnout (if applicable, risk-adjusted at 50-70% probability)
= Equity Value to Seller

Output Format

Your due diligence report should include:

1. Executive Summary — deal overview, key findings, go/no-go recommendation
2. Quality of Earnings — normalized EBITDA bridge with adjustments
3. Revenue Analysis — quality score, concentration, trends
4. Working Capital — NWC peg, seasonal analysis, close estimate
5. Cash Flow — EBITDA to FCF bridge, capex analysis
6. Red Flags — scored findings with severity and $ impact
7. Valuation Check — multiples comparison, sanity test
8. Negotiation Points — specific items for purchase agreement

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