Vendor Due Diligence

Vendor Due Diligence (VDD) tends to support the successful sale (or partnership) of companies and their assets, but can also help actual owners and management to better understand the risks their companies come across.

Vendor Due Diligence is a financial analysis of the object of sale on behalf of the seller that highlights the matters and problems of interest to the potential buyer of the business.

 
Vendor Due Diligence usually means:

• financial, tax and legal Due Diligence
• when these are manufacturing companies, — additional operational and technological Due Diligence is possible
• calculation of key performance indicators (adjusted EBITDA, working capital, net debt) that are used in determining the value of a business

Depending on the goal of Vendor Due Diligence, the nature of the company's transactions, the type of investor, VDD procedures can be further expanded: for example, an assessment of a financial model, a business plan, a restructuring plan, and so on.

More about the types of Due Diligence services provided by BDO in Ukraine

Having a Vendor Due Diligence, performed by a recognized international company, suggests a number of advantages for both actual business owners and potential buyers:
 

1. Benefits for actual owners are:

• access to inside information is obtained not by a potential investor (who may be a direct competitor), but by an independent third party
• early identification of risks and weaknesses before the start of negotiations with a buyer makes it possible to quickly fix them
• adjusted indicators of EBITDA, working capital and net debt make it possible to obtain an objective assessment of the company's value and assess the likability of a potential investor's offer, and to defend it reasonably during negotiations
• reduction of the risk of re-negotiation of the price if, as a result of Due Diligence, — as the buyer, — the financial indicators will be worse than those initially announced by the seller
• significant time savings: Vendor Due Diligence report allows buyers to carry out fewer Due Diligence procedures on their part that significantly reduces the time of inspections and the workload on company personnel during inspections

2. Benefits for potential buyers are:

• time saving and saving costs for auditing the company
• risk mitigation of not identifying risks during Vendor Due Diligence
• simplification of price negotiation process as the financial figures are verified by an independent third party

Based on years of experience, BDO in Ukraine experts select the most effective procedures for each specific case, based on the specifics of your business and your goals, which can significantly minimize your costs.

To order a consultation and clarify the cost of Vendor Due Diligence service for your business, please contact BDO in Ukraine experts.