Financial Due Diligence with Sorai

Section 01

What is financial due diligence

Financial due diligence evaluates the earning power, cash conversion, balance sheet quality, and debt-like obligations of a target business before a transaction closes. Buyers use the work to pressure-test the valuation model, identify required purchase agreement protections, and understand where reported performance may not reflect sustainable economics.

In practice, the work usually spans quality-of-earnings adjustments, revenue and margin review, net working capital analysis, cash flow bridge analysis, debt-like items, and the exceptions that become negotiation points. The problem is not only doing the math. It is keeping the logic, evidence, and reviewer comments readable when the deal team needs a single answer.

Section 02

Key deliverables

A solid FDD process produces more than a static memo. It should give the buyer a clean set of outputs that can be defended in diligence meetings, fed into the purchase agreement, and carried into investment committee materials without rewriting the entire workstream at the end.

Section 03

How Sorai automates FDD

Sorai is built to reduce the manual re-keying that slows financial due diligence and creates review risk. Source documents, trial balances, management schedules, and analyst comments stay connected so the system can automate structured extraction while preserving the context a reviewer needs.

Instead of letting QoE schedules, working capital models, and issue trackers drift into separate files, Sorai keeps findings in one operating record. Analysts can flag an adjustment, attach support, explain why it matters, and route it for review without reconstructing the story in email or side spreadsheets.

Section 04

QoE Engine overview

The QoE Engine focuses on the most time-sensitive part of financial diligence: separating recurring earnings from noise. Sorai organizes uploaded financials, trial balances, and management explanations so analysts can classify adjustments, record rationale, and show exactly why an add-back should or should not survive partner scrutiny.

That matters because a QoE issue is rarely just a number. It carries a source trail, an assumption set, and often a debate about whether the item is temporary, owner-specific, operationally fixable, or simply unsupported. Sorai keeps that debate attached to the adjustment itself, which is what manual schedules usually fail to preserve.

Section 05

NWC Calculator overview

Net working capital is where spreadsheet complexity often masks weak review discipline. Sorai's NWC Calculator organizes balance sheet accounts, monthly trends, and outlier commentary so the peg is based on a traceable operating view instead of a last-minute blended average that no one can fully explain.

Teams can compare historical periods, isolate seasonal swings, and document why certain balances should be included, excluded, or normalized. That creates a more defensible negotiation posture because the peg logic, not just the result, is visible to the full deal team.

Section 06

Cash flow review and liquidity analysis

Buyers do not only care about normalized EBITDA. They care about whether EBITDA turns into cash and whether the target's liquidity profile supports the operating plan after close. Sorai keeps cash flow review tied to the same diligence record as the QoE and balance sheet work so the team can see where earnings quality and cash conversion diverge.

That is especially important when reported profitability looks healthy but collections, reserves, capex, deferred revenue, or non-recurring working capital movements tell a different story. Sorai helps reviewers connect those signals early, document why they matter, and preserve the analysis for committee and lender discussion.

Section 07

Why Sorai vs manual process

Manual financial diligence still gets done, but it usually depends on analysts carrying the operating context in their heads while the artifacts stay fragmented. A spreadsheet may hold the calculation, a shared drive may hold the support, and the real logic may sit in comments or inbox threads that are hard for reviewers to reconstruct under time pressure.

Sorai improves that operating model by making the work reviewable while it is still live. The outcome is not only faster execution. It is a cleaner handoff from analyst work to manager review, partner discussion, and final investment committee materials.