Vendor due diligence




Vendor due diligence

Vendor due diligence is an independent report on the financial health of a company that is being sold which is commissioned by the vendors. This differs from vendor assist engagements due to the level of independence exercised by our team, therefore the ultimate purchaser or investor is able to place legal reliance on our report.

Vendor due diligence typically has the same key focus areas as financial due diligence, however by initiating the process, the vendor retains more control over the transaction.

The key benefits to vendor due diligence are as follows:

  • Control – the timetable, scope, terms of engagement and information presented are all controlled by the vendor (subject to some conventional standards and basic requirements of a prospective purchaser or investor).
  • Credibility – as the vendor due diligence engagement is undertaken by an independent 3rd party, it is balanced and can corroborate the key financial messages presented in the information memorandum.
  • Legitimacy – commissioning vendor due diligence is an indicator to prospective purchasers or investors that as a vendor you are fully committed to the process.
  • Minimising disruption – where there are multiple bidders, engaging in vendor due diligence means that there is only one financial diligence process, saving management and senior employee time and allowing them to focus on the activities which add value to the business.
  • Early identification of potential red flags – a vendor due diligence process can identify any potential red flags that may lead to erosion of value. By highlighting these early in the deal process, steps can be taken to rectify the issue or position the matter in the most commercially positive manner.

“The team were efficient in kicking off the due diligence process and delivered a detail-oriented and informative report in a fast-paced manner. The team also provided sound and pragmatic advise throughout the process, with a successful end-result. All in all, their services delivered well above our expectations.”

Fred Sundén-Cullberg, M&A, Humble Group AB

At Knight Transaction Services we understand that there is no one size fits all approach. We will work with you to determine a sufficiently broad scope to enable our vendor due diligence report to be useful to a range of buyers or investors.

Our team are all fully qualified due diligence specialists with experience of working with a range of business types, sectors and sizes.

Should potential purchasers, investors or lenders require additional work, due to our level of independence we are ideally placed to undertake top up work and we are able to commit a consistent team to your business to minimise disruption. At your request, we can also participate in question and answer sessions with interested parties to support the key messages delivered in our report and to provide them with further comfort.