In case of business disposals, vendors want to maximise the sales price, while at the same time keeping the sales process as efficient as possible. Experience has shown, however, that lack of preparation, insufficient regard for business performance during the disposal process and poor process management are among the factors in a divestment process that have a negative influence on value. This is where a vendor due diligence may come into play.
A vendor due diligence is a thorough due diligence of a business, which aims to address the concerns and issues that may be reasonably relevant to a potential purchaser. The vendor due diligence report will be provided to each potential purchaser, rather than multiple purchasers undertaking extensive individual due diligence exercises. A vendor due diligence is therefore suitable in situations where there are likely to be a large number of potential purchasers, typically in an auction process.
The relevant areas of concern may include amongst others the financial, tax (such as corporate income tax, VAT, social security tax and customs & excises), legal, labor, IT, environment and market/commercial situation of the company.
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