Vendor Due Diligence
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When a company is up for sale, whether as a whole or parts of its operations only, it needs to show an in-depth report on its financial health to potential buyers. The processes which start from the related review and analytical work to the generation of the in-depth report are collectively referred to as vendor due diligence.
Vendor due diligence is an in-depth report on the financial health of a company that is being sold. It provides vendors with greater control over the sale process and the timing of sale, which can, in turn, help secure a higher price for the business.
While the goal of vendor due diligence is to present the historical financial/operational performance and future prospect of the business being sold in detail, thus allowing that potential buyers to understand and assess its financial health/operational efficiency with confidence. Vendor due diligence also aims to address the concerns and issues that may be relevant to even the most demanding purchaser.
If this is your situation
- Your company’s strategy involves disposing of part of the business, whether through a carve-out of business units, or by the sale of existing entities
- Your company is in the process of restructuring/re-focusing its activities
- You want to reposition your portfolio focus on core businesses, or return value to shareholders
- You have started to feel pressure from financiers as a result of deteriorating financial ratios.
PwC can help you
- Provide vendors with greater control over the sale process and the timing of sale, which can help secure a higher price for the business
- Provide purchasers with greater certainty over the nature of the business and the characteristics of its cash flow. This helps pricing decisions and the level of gearing the structure will support
- Reduce disruption to the business as the sale process is more controlled
- Help add credibility to the facts, figures and information provided in the sales memorandum
- Remove the necessity for a buyer to have substantial access to do their own due diligence work as they will be able to rely on the vendor due diligence report
- Early identification of value critical issues, providing the option to "regroup and fix" outside the glare of publicity
- Reduces uncertainty risk for finance buyers, potentially justifying higher offers.