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).
