A commercial due diligence (CDD) evaluates the future viability of a company – in line with market expectations, its competitive position and strategy.
In order to obtain a differentiated result, we include the experience of our industry experts, relevant studies, interviews with market participants and customised market models in our analyses. We examine the value chain, evaluate the company's business model, and identify risks in structures and processes (especially purchasing and sales).
In addition, we carry out detailed quantitative and qualitative benchmarking with competitors and possible substitutes – from relative financial performance to operational performance, e.g. with regard to possible key purchasing criteria (KPCs). The topic of sustainability or ESG is becoming increasingly relevant in this context: our ESG scoring provides stakeholders with a comprehensive picture of the status quo and areas for action.
These insights are combined in the plausibility check of the turnover planning. This provides the parties to the transaction with a reliable basis for decision-making on the valuation of the company, which also highlights any red flags (obstacles to the transaction) at an early stage.
Our analyses often have a sustainable effect – for example, new insights into market developments and the competitive situation can influence the purchase/sale price. We therefore offer comprehensive and reliable bases for decision-making in the transaction process and thus prevent potential misjudgements. In addition, our analyses offer starting points for positioning the company strategically in the long term.
Each due diligence plays an important role in the valuation. CDDs focus on the plausibility of the planned sales development – but they also relevant for future profitability through competition and trend analyses. FDD and ODD are of great importance to round off the overall picture and to provide stakeholders with an overall assessment of the target company. On their own, however, they often fall short, as they mainly shed light on the internal sphere in the status quo or planning, whereas CDD also assesses external factors, some of which lie in the future. The scope and focus of a CDD is determined by the client's requirements – strategic investors usually have a different focus than financial investors.
This depends on the specific service – buy/sell side CDDs or red flag reports – as well as on the wishes of the client and the requirements of other stakeholders. Some analyses are part of the standard repertoire to enable a statement on the plausibility of turnover planning: for example, the historical and planned development of the product and service portfolio, possible margin developments, definition of customer groups and USPs, identification of central market drivers and competitive positioning. Depending on requirements, we control the scope of these analyses and increase the level of detail, for example by creating suitable market models, country-specific assessments or comprehensive (anonymous) surveys of customers, competitors, and market experts.
