Answers / Financial Due Diligence
A company shows 30% revenue growth. What would you investigate?
A core Financial Due Diligence interview question — asked in analyst and associate interviews across IB, PE, and the Big 4.
THE SHORT ANSWER
Decompose growth into: organic vs. M&A-driven;, volume vs. price vs. mix, new vs. existing customers (cohort analysis), recurring vs. one-off revenue. Check if growth is concentrated in specific customers (concentration risk) or products. Analyze monthly patterns – is growth evenly distributed or hockey-stick? Compare to market growth – is the company taking share? Investigate whether growth is sustainable or driven by one-off factors.
WHAT INTERVIEWERS LISTEN FOR
- ✓Organic vs. M&A growth
- ✓Volume vs. price vs. mix
- ✓New vs. existing customers
- ✓Recurring vs. one-off revenue
- ✓Concentration risk and sustainability
COMMON MISTAKES
- ✗Accepting growth at face value
- ✗Ignoring one-off or unsustainable factors
- ✗Failing to compare with market growth
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