Glossary · Diligence
Vendor due diligence
Also called VDD, sell-side due diligence
Definition
Vendor due diligence is diligence the seller pays for on its own company before going to market. Independent advisers write the reports, and bidders read them in the data room instead of each running a full review from scratch. It speeds up the process and surfaces problems while the seller still has time to fix them.
Where vendor due diligence comes up
On this site, in our guides and in the conversations we've written up.
Related terms
Due diligence The investigation a buyer, investor or lender runs on a company before committing: its finances, contracts, legal position and operations. Red flag report A short diligence report that lists only the serious issues, instead of describing everything that was reviewed. Sell-side The seller's side of a deal: the company or owners selling, and the advisers who run the sale for them. Commercial due diligence A test of the target's market, customers, competitors and growth plan, to see whether the business case holds. Financial due diligence Diligence on the numbers: earnings, working capital, debt and cash flow behind the headline figures. Legal due diligence The lawyers' review of a company: ownership, key contracts, disputes, licences, employment terms and intellectual property. Operational due diligence Diligence on how the business actually runs: processes, systems, supply chain, sites and people. Tax due diligence A review of the target's tax filings, structures and exposures, so hidden tax liabilities are priced in or covered.