Commercial Due Diligence
Proprietary insights for high-stakes decisions
Collectors often purchase classic cars at auction, where they only have a short time before bidding to evaluate their targets to become comfortable over uncertainties. Similarly, M&A decisions are usually made in compressed time frames and under extreme pressure. Acquisitive companies often have only a few weeks to decide whether to make an offer, and an important decision factor is whether they believe a target company’s claims about its position in the marketplace, financial stability, and hypotheses about future growth potential.
Effective Commercial Due Diligence (CDD) is imperative not only to substantiate important attributes of the deal, but to do so in as short a time as possible.
Deloitte’s CDD team provides highly customised commercial and operational support to both private equity and corporate clients throughout the M&A lifecycle. Our specialist team has industry and market expertise, and will respond to the specific needs of your transaction or investment situation.
We bring insights that inform your investment thesis, deal valuation and post-deal value creation plan by rapidly conducting primary research and combining it with secondary sources, covering the target company’s markets, customers, suppliers, and competitors. And we can do this virtually anywhere in the world.
Through strategic due diligence, we also assess potential upside opportunities that the business may not be taking advantage of, and possible downside risks that could disrupt the near-term or ongoing value of the deal.
Where relevant, we work closely with our financial, tax, IT and HR due diligence colleagues to ensure joined-up insights and a smooth process, reducing the burden on your deal team and the target company.
- Testing important valuation inputs
These include stability of the company’s current revenue sources, robustness of the growth potential, sustainability of profit margins, and level of investment needed to achieve these
- Sizing markets
Define and quantify the addressable market for the particular set of products/services and understand the key growth drivers and dependencies.
- Understanding the target’s true competitive position
Test a target company’s market positioning both structurally and as perceived by customers and competitors.
- Understanding operational effectiveness
Together with operational and technology specialists, test the effectiveness and scalability of the target company’s operating platform in terms of converting revenue into profit and cash flow.
- Vetting the investment thesis
Helping define how to drive profitable growth and create an industry winner by employing M&A and other value creation opportunities, in alignment with corporate/investment strategy.
- Clear view of the target company’s performance and positioning.
- Quantifiable support for valuation inputs and clarity on upside potential and downside risks.
- Actionable value creation opportunities and synergies (where applicable).