What should good CDD look like and what should it deliver?
Commercial Due Diligence (CDD) is seen as a critical element of the diligence suite for a PE transaction. And what CDD ‘looks like’ is well understood. Market and competitor analysis, customer referencing, perhaps a data analysis section, and a review of the business plan, are all what might be called standard modules.
However, for CDD to be truly value-add, it needs to provide a rounded view of the business being analysed; what is it now, what could it be in the future, and what do we need to do to get it there?
That’s where the ‘good’ comes in. CDD shouldn’t focus either on the ‘inside-out’, or the ‘outside-in’. All of the elements need to sit together to provide a holistic view of opportunities and risks. Market and competitor work needs to dovetail with what the customers are actually saying. Data analysis needs to dovetail with what the Customers are actually doing. The business plan analysis needs to dovetail with what is realistically achievable from both current and potential customers, given the shape of the business and the products/services it offers. And all of this needs to be presented concisely, with answers that are to-the-point and timely, to fit in with deal deadlines.
Who are our customers now, what are we selling to them, and how? What do these customers really think of us? What does our Ideal customer look like, how can we find more of them, and at what cost? Does the market give us enough headroom? Do our products and services fit what the customers are looking for now, and what they are likely to be looking for in the future? What are our competitors doing, what are they likely to be doing in the future, and what should we do about it? Is the business geared up for its growth plans?
At Armstrong, we have over 20 years experience in figuring out the right questions to ask, and delivering holistic answers to these questions. Contact us to discuss any opportunities you may be looking at.
Peter Cookson
pcookson@armstrong-ts.com
+44 7871 425 467