Fact Book

A fact book is a collection of facts about a company's finances and business prepared by the seller. It provides organised data but deliberately does not include its own assessment. Buyers use it as a reliable basis for their own analysis. Its content typically comprises prepared financial data over several years, reconciliations from reported to adjusted earnings, breakdowns by product, customer, region and channel, and information on working capital, capital expenditure and personnel.

The decisive difference from a vendor due diligence report lies in responsibility: a fact book presents data in structured form without an expert assessment, so buyers and their advisors must perform the evaluation themselves and as a rule cannot rely on the preparer. The advantage for the seller is that the information requests of all bidders are answered in advance in one place, which speeds up the process considerably, reduces the burden on the finance function and prevents different bidders receiving different figures. For the buyer the benefit is time saved and a common data basis on which its own review can build.

In practice this format is most common in the mid-market, where the cost of full vendor due diligence would be out of proportion to deal size. The document is often supplemented by a databook in spreadsheet form making the figures available for analysis. Currency of the data is essential to its usefulness, because a document based on accounts several months old is quickly overtaken during the process and then triggers individual requests after all. Updating it during the ongoing process is therefore advisable. Scope also needs settling, since a too brief compilation misses the point while an overly extensive one raises cost without replacing the buyer's diligence. Concentrating on the items with direct price impact has proven itself.