What is Vendor Due Diligence?

If the seller commissions the due diligence examination, this is referred to as a "vendor due diligence".

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If the seller commissions the due diligence examination, this is referred to as a "vendor due diligence".

While in "buy-side due diligence" the buyer is the client of the due diligence(careful analysis and evaluation of companies prior to M&A transactions), in"vendor due diligence" the initiative for the audit comes from the seller. This isless often the case, but also happens.

The vendor due diligence provides the seller with important information: Hecan identify weaknesses in his own company and eliminate them before thepurchase or before a buy-side due diligence. The subsequent examination ofthe object for sale by the buyer therefore has less to worry the seller - he isbetter protected against unpleasant surprises. Vendor Due Diligence alsoreduces the effort for the buyer side, because the seller can provideimportant information in advance - especially if the offer goes to severalbuyers, this procedure simplifies the process.

The analysis effort of vendor due diligence is usually higher than that of buy-side due diligence. This is because the seller has to take into account thedifferent interests of potential buyers. For example, a buyer with long-termand strategic intentions (e.g. a competitor) has different interests from afinancial investor.

Read here how you can identify risks at an early stage and what benefits IT due diligence brings.
Meinolf Schaefer01 1444x1444px

Meinolf Schäfer, Senior Director Sales & Marketing

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