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What is Commercial Due Diligence?

Commercial Due Diligence (CDD) is a service for potential acquirers of businesses (e.g. large corporate firms, private equity funds) providing a thorough assessment of a target's positioning within its commercial environment. 

Typically a CDD report would assess the target across the following areas:

  •   Market structure, size and drivers
  •   Key competitors, market share, basis of competition and barriers to entry
  •   Customer and supplier feedback
  •   Business plan achievability, key risks and areas for improvement


Examples of projects include:

  • A Private Equity business is in the final stages of purchasing a business and commissions a Commercial Due Diligence report to provide comfort for the banks that the business will achieve its revenue projections
  • A large corporation is interested in increasing its attractiveness to potential bidders and commissions a vendor commercial due diligence report, which it can then circulate to potential bidders who can use the document to help raise debt financing
  • A corporation is looking to raise debt funding to fund its expansion plans and commissions a commercial due diligence report it can send to the banks

Example companies that provide CDD services include: Big Four Accountancy firms (KPMG, PWC, Deloitte and Ernst & Young), Bain, Booze Allen & Hamilton, LEK and boutique consulting firms (e.g. PMSI, Ovum).


Also see:


Generic scope for CDD report

Vendor Commercial Due Diligence (VCDD)

Operational Due Diligence (ODD)

 

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