A vendor Due Diligence is a different terminology for sell side Due Diligence. It is similar like a buy side Due Diligence but originated by the seller. Hence, it is often also called a sell side due diligence. In the end it is a full and independent review of a company before it will come up for sale. In the past this used to be done by each buyer independently. However, since many years now sellers have learned it can be useful do a due diligence as well on the own company. By doing a VDD the seller learns a lot about it’s own company. Vendor Due Diligence can be described as the investigation and analysis to have the own company assessed. A strong focus is on the financial business drivers that determine the future results. The reason is that the investigation can help with getting an increased price for the company. In practice often the people that do the Vendor Due Diligence also defend and explain the Due Diligence performed to the buyers.
A vendor Due Diligence is important and can be very useful. As a business owner you can benefit a lot by having a vendor DD done. A vendor due diligence project can provide valuable information to a seller. This can sometimes be the difference between a succeeded or failed business sale. At the minimum it can help in support to the proposed acquisition and possibly at a better price.
Especially when there are various interested buyers, having a consistent report and documentation can reduce the required for a sales process. Hence, a sell side (vendor) due diligence can help in decreasing the answering time and get away obvious questions. Vendor (sell-side) due diligence will increase the quality of the offers received and maximize the value of a business sale. Hence, a vendor due diligence will normally far offset the costs involved
This document provides an example on how to develop a vendor due diligence report.
business model sustainability, competitive position, consolidation trends, customer dependency, market development, market growth, market positions, market size, product dependency, product segments, profitability, sales development, structural development, supplier conflict potential, supplier dependency, value chain, value proposition, value proposition performance, vendor due diligence