Commercial due diligence is the process of appraising a target
by reference to its market and, above all, whether the company is positioned to
succeed. We tackle the issues at the heart of the business: market conditions and
outlook, macroeconomic influences, industry structure, regulatory environment,
competitive benchmarking, and relationships with key customers and
suppliers. We consider, in particular, the impact of these factors on the target's
ability to deliver its forecast results which forms the basis of valuation of the
company.
Commercial due diligence process seeks to answer some tough questions.
Here are a few examples:
Market demand
- Is the level of market demand sustainable?
- Is the company focused on the right market segments?
- Will the introduction of new technology affect demand?
Customers
- How strong are the company's relationships with key customers?
- Will their purchasing patterns alter in the next five years?
- Is further customer penetration achievable through existing sales channels?
Products
- How do the company's products compare with competitors'?
- How is the product life cycle changing?
Business plan
- How likely is the company to achieve its forecast results?
- How sound are the underlying assumptions?
- What are the material sensitivities?
