Divergent CPA is a Financial Due Diligence Firm for Business Buyers
Every Divergent CPA engagement is hands-on, structured, and built around protecting business buyers. Our number one priority is ensuring the quality and integrity of your deal.
We frame our work around what we call the Divergent CPA Five: the five pillars of buy-side financial due diligence. Every buyer we work with receives all five, and each report is designed to evolve with your deal so you always have clarity before you close. So, what is the Divergent CPA Five?
Earnings Quality
The foundation of deal value.
Not all earnings are created equal. Some are durable and recurring/reoccuring; others are one-time, inflated, or unsustainable. Our job is to separate the two.
We rebuild the seller’s financials to cut through adjustments, add-backs, and storytelling. What comes out is a clear picture of true earnings, the number that actually supports your purchase price.
WHAT WE DON’T DO:
We don’t take the seller’s numbers at face value.
We don’t assume every add-back is valid.
We don’t pad reports with technical jargon to look smart.
We don’t stop at “last year’s earnings”. We show whether those earnings are repeatable.
Revenue & Margin Health
Strong businesses grow sales consistently and protect their margins. Weak ones spike, stall, or erode. Our role is to cut through the noise and test whether growth and profitability are built on solid ground.
We analyze revenue sources, customer concentration, and margin trends to see where the business really stands. That means looking at:
Customer concentration: Is too much revenue tied to a handful of accounts?
Channel dependency: Is growth reliant on one acquisition channel?
Product/service mix: Is value concentrated in one product line, or diversified?
Recurring/reoccurring vs. one-time: How much revenue is predictable vs. project-based?
Key-person dependency: Would one person leaving put the business at risk?
We tie this back to two of the most important metrics of business quality: organic revenue growth and free cash flow margin. Together, they tell you whether this business is compounding value.
Cash Flow Health
The truth about cash generation.
A business can look profitable on paper but still bleed cash. That’s why we dig into how cash actually moves through the company.
We analyze working capital cycles, seasonality, and capital intensity to answer the question: “Will this business fund itself or will it constantly need more cash once you own it?”
That means looking at:
Working capital needs: How much money gets tied up in receivables, inventory, or payables.
Cash conversion cycle: How long it takes to turn a dollar invested back into cash.
Seasonality: Whether there are periods where cash drains before it refills.
Capital intensity: How much ongoing reinvestment (equipment, capex) is required to sustain operations.
We tie this back to free cash flow, what a business actually produces for its owners. And return on invested capital, the third most important quantitative metric for business quality.
Balance Sheet Strength
The realities that affect cash once you own it.
When you buy a business, you’re paying for its earnings, but you also inherit the way it manages receivables, payables, and inventory.
We review:
Reported balances: Do the accounts tie out as presented.
Variance analysis: Are there unusual swings that need explanation.
Accounts receivable and payable aging: Are customers paying on time, and is the business stretching vendors.
Inventory health: Is capital tied up in slow-moving or obsolete stock.
Net working capital peg: Will the business be delivered with enough current assets to operate smoothly after closing.
Key Value Drivers
What really makes or breaks the deal.
“Going forward” matters more than “today.” A business isn’t just its past performance, it’s the levers that will determine whether it grows, stalls, or declines under your ownership.
That’s why we go beyond tying out numbers and focus on Value Drivers: the handful of factors that can move the business for better or worse. These aren’t theoretical, they’re the real-world levers that shape revenue, margins, and cash flow.
For example:
In e-commerce, average order value can make or break profitability.
In services, client retention can be the difference between compounding value or constant churn.
In capital-intensive industries, asset turnover can separate sustainable cash flow from a money pit.
Our approach is to take a holistic view of the target and identify the top three Value Drivers we believe matter most, along with the Key Risks that could undermine them. The goal isn’t to predict the industry’s future, that’s your expertise as the buyer. It’s to show you, with numbers, where the deal is strong, where it’s fragile, and what deserves your focus before you close.