Answers / Financial Due Diligence
What is the difference between a databook and the FDD report, and why do you tie every report number back to the databook?
A core Financial Due Diligence interview question — asked in analyst and associate interviews across IB, PE, and the Big 4.
THE SHORT ANSWER
The databook is the underlying Excel analysis — the granular, sourced datasets (P&L by month, by segment, working-capital schedules, the EBITDA bridge) built from the target's data and reconciled to source. The report is the narrative: findings, adjustments, red flags and their implications, written for the deal team and ultimately the SPA. You tie every number in the report back to a databook cell so that each statement is traceable and defensible — when a buyer, lender, or the seller challenges an adjustment, you can show exactly where it came from and how it ties to source. It also protects quality control and supports reliance: a report number that doesn't reconcile to the databook is an error or an unsupported assertion, and either undermines credibility or, in a relied-upon report, creates liability.
WHAT INTERVIEWERS LISTEN FOR
- ✓Databook = granular sourced analysis; report = narrative findings
- ✓Every report number traces to a databook cell
- ✓Traceability makes adjustments defensible under challenge
- ✓Supports QC and reliance; protects against unsupported assertions
COMMON MISTAKES
- ✗Report figures not reconciling to the databook
- ✗Treating the report as standalone assertions
- ✗No audit trail to source
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