Pre purchase due diligence of ready made financial companies in the EU

Nikita Veremeev

19.01.2026 | 6 min read

Updated: 19.01.2026

When an entrepreneur asks me which is faster: to set up a new entity or to buy a ready-made financial company in the EU, I always answer the same: the speed of the deal means nothing without quality Due Diligence. This is where those who treat the review not as a formality but as an investment in their future business win.

And conversely: where the COREDO team conducted a comprehensive company review, the client entered the deal knowingly, with a clear understanding of the risks, a fair price and workable guarantees from the seller.

Due Diligence when purchasing a financial company in the EU

Ready-made financial companies in Europe are not just a “shell with a license”. They are:

• existing obligations to regulators and tax authorities;
• transaction history, clients and counterparties;
• executed contracts and legal risks;
• internal control systems and AML procedures;
• reputation in the market and with supervisory authorities.

When acquiring a company in Europe you buy all of this at once, along with the potential problems of the previous owner.

That is why I view financial due diligence, legal due diligence and tax due diligence not as three separate services, but as a single comprehensive review of the company in which the components are closely connected.

Express analysis or full due diligence: how to choose?

At COREDO we conventionally divide checks into two levels:

Express due diligence analysis

I use the express format when:

• the client needs to quickly assess the feasibility of the transaction;
• there are several targets for purchasing a ready company in the EU and a preliminary ranking is required;
• the budget at the first stage is limited, but it is necessary to weed out clearly problematic options.

As a rule, express due diligence analysis includes:

• basic review of corporate documents;
• initial check for ongoing litigation and public sanctions;
• review of licenses and permits;
• overview of key financial statements and indicators;
• initial assessment of the company’s legal cleanliness and obvious tax risks when buying the company.

When due diligence is unavoidable

I consider full due diligence mandatory if:

• the target is a licensed financial company (payment institution, electronic money institution, investment firm, crypto company CASP/VASP, etc.);
• the buyer intends to use the company as a strategic asset — developing it, scaling it, attracting investors;
• the deal size is significant, and an error would be critical for the business.

In a full due diligence we include:

• detailed financial due diligence;
• in-depth legal due diligence;
• a separate tax analysis block;
• review of the internal control system, AML/KYC procedures, governance;
• assessment of market position and business model.

Structure of due diligence for a financial company

When the COREDO team gets involved in a project to review a ready-made company in the EU, I look at it across several key areas.

Legal due diligence: verifying the transaction’s integrity

What’s included:

• Review of corporate documents
  • charter, articles of association, resolutions and minutes of governing bodies;
  • ownership and control structure, beneficiaries;
  • existence of restrictions or encumbrances on shares/stakes;
  • history of changes in members/shareholders and directors.
• Analysis of the company’s contracts and liabilities
  • agreements with key clients and counterparties;
  • agreements with IT infrastructure providers, PSPs, banks;
  • leases, outsourcing, white label, agency agreements;
  • pledges, guarantees, sureties.
• Review of the company’s history and litigation
  • current and past legal disputes;
  • administrative cases, regulatory fines;
  • investigations in AML/sanctions, claims by supervisory authorities.
• Intellectual property and IT assets
  • rights to software, domains, trademarks;
  • license agreements;
  • confidentiality and trade secret regime.

The result of this section: an understanding of to what extent the company’s legal soundness meets the buyer’s expectations and what set of warranties and representations from the seller will be required in the SPA.

Financial due diligence: numbers and debts

Main elements:

• Review of the company’s financial condition
  • analysis of financial statements for 2–3 years;
  • revenue, gross and operating profit;
  • expense structure and margins.
• Assessment of working capital
  • level and composition of accounts receivable and payable;
  • policy for provisioning doubtful debts;
  • presence of problematic or “stalled” positions.
• Net debt and debt burden
  • loans, borrowings, financial leasing;
  • intragroup obligations;
  • structure and cost of debt capital.
• Adequacy of reserves when acquiring a company
  • reserves for legal disputes;
  • reserves for disputed taxes;
  • assessment of potential “off‑balance” risks.
• Analysis of the actual operational activity
  • consistency of turnover with the business model;
  • relationship between actual cash flows and those reported in the financial statements;
  • check for “inflated” turnover or artificial profit before sale.

The task of this stage is to give the buyer an honest answer: how sustainable the current financial picture is and whether there are any “time bombs” in the form of concealed liabilities.

Tax due diligence: main risks

Tax risks when acquiring a company in the EU are often underestimated, especially when it comes to cross-border structures involving multiple jurisdictions.

In the tax section we include:

• analysis of tax returns and calculations for main taxes over several years;
• reconciliation of the tax base and financial statements;
• checks of correct application of exemptions and special regimes;
• assessment of cross-border transfer pricing schemes and intra-group services;
• identification of potential unrecognized tax liabilities.

In practice, three instruments are used:

• adjustment of the deal financing structure (debt/equity, earn‑out, deferred payments);
• tax-optimized structuring of ownership (holdings, jurisdictions in the EU and third countries);
• inclusion in the SPA of specific tax warranties and representations by the seller and compensation mechanisms.

AML and internal control in financial companies

The COREDO team regularly provides AML consulting and support to financial institutions, so in such transactions we always check:

• existing AML policies/CFT, KYC, sanctions control;
• risk‑based approach procedures, client categorization;
• work of the compliance officer and the internal audit function;
• quality of client files and completeness of KYC documentation;
• existence and content of reporting to regulators;
• cases of blocks, refusals to provide services, regulator inquiries.

This section allows us to assess:

• how compliant the company is with regulatory requirements;
• whether there is a risk of sanctions or license revocation;
• how easily the company can be integrated into your existing compliance system.

personnel management in the organization

I always pay attention to:

• management structure and allocation of functions;
• key employees: directors, MLRO/AML officer, heads of departments;
• motivation system and the risk of critical personnel leaving after the deal;
• presence of internal regulations and KPIs.

Market position and business model

For financial companies in Europe, especially with EMI/PI or CASP/VASP licenses, I always look at:

• assessment of the target company’s market position;
• structure of the client base;
• dependence on individual providers or partners;
• sustainability of the business model and its scalability.

Two-stage process: data collection and negotiations

Stage 1. Initial collection and rapid analysis

At this stage I:

• compile the list of documents to be analyzed;
• organize access to the data room (electronic document archive);
• conduct an initial screening for red flags: litigation, sanctions, regulatory risks, major tax inconsistencies.

• either walk away from the deal;
• or radically revise its structure and price.

In-depth analysis and conclusions

After the initial filter, the COREDO team proceeds to detailed examination:

• all material contracts;
• financial metrics and calculations;
• internal procedures and control systems.

The result is a due diligence report:

• a detailed opinion for each section;
• a list of identified risks and their likelihoods;
• an assessment of investment risks and possible consequences;
• recommendations for minimizing the impact of risks and mitigating them.

How to use due diligence to your advantage

Revising the price and terms of the deal

• adjust the transaction price and guarantees;
• request additional guarantees and seller’s representations;
• require withholding part of the payment in escrow until certain risks are remedied;
• initiate a review of payment terms based on the DD findings (deferment, earn‑out, partial buy‑out).

Structure of deal financing

Based on the review:

• the financing structure of the deal changes (balance of equity and debt);
• covenant terms for banks and investors are determined;
• a tax‑efficient ownership structure is formed.

Enter the deal or walk away

Due diligence for financial companies in the EU

Unlike classic M&A in the real sector, due diligence of financial companies in the EU has its own specifics:

• mandatory verification of licenses and compliance with regulator requirements;
• analysis of interactions with correspondent banks and payment providers;
• review of the history of regulatory inspections and any enforcement orders;
• assessment of reputation in the market and in the professional community.

The COREDO team regularly supports clients in obtaining financial licenses in EU countries, the United Kingdom, Singapore, and also supports transactions for the sale of companies. This experience helps us see which requirements are particularly sensitive for specific jurisdictions and segments (EMI/PI, investment firms, crypto companies).

How to prepare for due diligence

Based on my experience, I will outline a few recommendations that help entrepreneurs and chief financial officers navigate the acquisition of an established company in the EU in an informed manner:

1. Engage experts early. The ideal time is before signing the LOI or at its stage, with clear provisions preserving the right to withdraw from the deal based on the results of the due diligence.
2. Decide on the format: express or full. For initial target screening an express analysis is sufficient; for the final selection and price negotiations, only a full due diligence.
3. Discuss access to data with the seller right away. A transparent, well-structured data room is a good indicator of the seller’s good faith.
4. Focus on critical risk areas. For financial companies these include: licenses, AML/KYC, taxes, litigation, debt burden, client structure.
5. Use the findings of due diligence in negotiations. A quality report is an argument, not just a box-ticking exercise.
6. Plan integration in advance. Based on the review results, you should immediately develop a plan: changes to governance, updating policies, revising contracts, strengthening compliance.

How COREDO helps you navigate the process

Since 2016 COREDO has supported international business in company formation, licensing and legal Due Diligence in Europe, Asia and the CIS.

• understands the specifics of financial licenses and regulatory requirements;
• combines legal, financial and tax due diligence within a single team;
• is able to integrate the review with the subsequent deal structure and post-sale support.

In a typical due diligence project for a financial company in the EU the COREDO team:

• analyzes the legal status and corporate structure;
• conducts a financial review of the company and its financial statements;
• assesses the tax risks of the transaction target and options for their mitigation;
• checks the internal control system of the target company and its AML procedures;
• prepares a clear report for owners and investors, prioritizing risks;
• helps use the findings in negotiations and in the contract structure.

When a manager sees not only a list of risks, but also a clear plan for how to mitigate them, how to structure financing and which seller guarantees to request: the deal stops being a lottery and becomes a manageable process.