In an owner-managed business, the accounts describe the tax position, not the business
That gap is where SME deals in this region are won and lost. Financial due diligence, on either side of the table, done by people who have run finance inside companies of exactly this size and know where the problems sit.
- Buy side
- Quality of earnings,
working capital, exposures - Sell side
- Vendor preparation
and the data room - Buy-side review
- Typically 2 to 3 weeks
- Vendor preparation
- 6 to 12 weeks
- Legal diligence
- Narai Partners
- Licensed broker
- No. We say so upfront
- After completion
- Integration of finance
Six things we look for before you pay
Is the profit real, and is it repeatable
Quality of earnings is the whole exercise. Owner remuneration below market, related party rent, personal costs in the company, one-off gains presented as trading, revenue recognised early. Each is normal in an owner-managed business and each changes the number you are buying.
Two sets of books, or one set with a gap
In this region it is common for the statutory accounts prepared for the tax authority to differ from what the owner believes the business earns. Neither is necessarily dishonest. You need to understand the difference, quantify it, and decide which one you are paying a multiple on.
Working capital, and what normal actually looks like
The single most litigated item in SME deals. A completion mechanism built on a normalised working capital level that nobody analysed properly hands the other side a windfall. Twelve to twenty-four months of monthly data settles it before the lawyers get involved.
Debt and debt-like items nobody called debt
Shareholder loans, unpaid taxes, accrued staff entitlements, deferred supplier balances, unfunded severance obligations, lease commitments. Thai severance liabilities in particular are frequently unprovided and material.
Revenue concentration and contract reality
How much revenue sits with the top few customers, whether contracts survive a change of control, and whether the relationships belong to the company or to the owner who is leaving.
Tax exposure sitting quietly in the past
Unreconciled withholding tax, VAT input claimed on defective invoices, undocumented related party charges, BOI conditions not met. These do not disappear at completion. They become yours.
Preparing before anyone looks
Fix it before they find it
Everything a buyer will discover is discoverable by you first, and it costs a fraction as much to fix in advance as to concede in a negotiation. Vendor preparation is the highest-return finance work an owner ever buys.
Build the quality of earnings argument yourself
Normalisation adjustments are far more persuasive when they are documented, consistent and presented by the seller than when they are argued for defensively after a buyer has anchored on the statutory number.
A data room assembled before the process opens
Structured, indexed and complete. A data room that arrives in pieces during diligence tells a buyer something about the company that no amount of explanation undoes.
Three years of clean, consistent monthly numbers
Buyers discount what they cannot see monthly. If the management accounts only exist annually, or the basis changed halfway through, that uncertainty is priced into their offer at your expense.
Decide what you are selling
Share sale or asset sale, which entities are included, what the owner keeps. These are structural decisions with tax and legal consequences that are far cheaper to take early than to renegotiate.
Scope, cost and boundaries
Are you licensed to give transaction advice?
We are CFOs, not a licensed corporate finance adviser or broker, and we say so plainly. We do the financial work: quality of earnings, working capital analysis, the model, the data room and the answers to finance diligence. Where the deal needs a licensed adviser we work alongside one, and legal diligence goes through counsel, including our sister firm Narai Partners, whose corporate and commercial practice handles the legal side.
How is this different from Big Four due diligence?
Scale and price. For a deal in the low single-digit millions, a Big Four report frequently costs more than the risk it is quantifying. We bring people who have run finance inside businesses of exactly this size and know where the problems hide. For a large or highly contested deal, a specialist firm is the right call and we will tell you so.
How long does it take?
A focused buy-side review of a single-entity SME is typically two to three weeks. Vendor preparation is longer because it involves fixing things, usually six to twelve weeks depending on the state of the records.
We are buying a Thai company. What is different here?
Three things above all: the gap between statutory accounts and economic reality, unprovided severance and staff entitlements, and legacy tax exposure in withholding and VAT that transfers with the shares. Foreign ownership restrictions and BOI conditions also survive the deal and are a legal matter for counsel.
Can you help after completion too?
Yes, and that is often where the value is actually lost or made. Post-merger integration of the finance function, aligning the acquired entity to your reporting, and getting a first credible consolidated close. See regional groups.