How We Saved Our Client from a ₹230 Million Restaurant Chain Disaster
FINANCIAL DUE DILIGENCE
Aashray Aashray
4/4/20251 min read
Last month, we found ₹35 million hidden in debt while examining a small restaurant chain's book. The buyer almost missed it. They were THIS close to making a terrible ₹230 million mistake.
Hi! We're The Finance House. Let us tell you how financial due diligence saved one of our clients from a major headache.
The Restaurant Chain Con
'Spice Delight' looked amazing on paper: (cannot tell the name of the Company)
5 popular locations across Bangalore and Mumbai
27% growth rate
Profits that made competitors jealous
But something fell off. We dug deeper and found that 40% of their "revenue" was fake. They recorded advance bookings as confirmed sales and created circular transactions with their suppliers!
The real numbers were ugly:
Real revenue: Almost half what they claimed
Actual profits: They were LOSING money
Hidden debt: ₹35 million
Our client walked away. Later, their CEO told us: "That was the best money we never spent."
Why Companies Miss These Red Flags
In our work across 15+ deals, we've found most companies miss:
Hidden debts and obligations
Real cash needs
Tricky revenue reporting
Surprisingly, most problems aren't from outright lying. They come from different ways of counting money and running businesses.
Our Simple Three-Step Approach
At The Finance House, we look at:
The obvious stuff: Financial reports and industry comparisons
The business reality: How money actually flows through the company
The proof: Checking actual transactions and customer data
This approach has saved our clients ₹100 million in bad deals over the past four months.
Why This Matters Now
With today's higher interest rates and more realistic company values, good due diligence isn't just about avoiding disasters—it gives you an edge.
Companies that do thorough checks typically pay 8-12% less for acquisitions and have much better results afterward.
Let's Talk!
As we often say at our firm: "Financial statements are like marriage biodata. They look good on paper, but you need several meetings before saying yes!"
Have you ever discovered something surprising during due diligence? Share in the comments!
The Finance House is a boutique consulting firm helping Indian businesses make smarter acquisition decisions.