Vendor Due Dillegence

Vendor due diligence is an audit that is carried out by the seller of a company. In contrast to buy-side due diligence, where the buyer commissions the due diligence, vendor due diligence is initiated by the seller.

Vendor due diligence offers the seller the opportunity to conduct a comprehensive legal review of the company to be sold. This examination enables the seller to recognise weaknesses in their own company and eliminate them before the purchase or before a buy-side due diligence. This can optimise the sales process and protect the seller from unpleasant surprises.

The results of the vendor due diligence can provide a basis for pricing and for choosing the optimal form of transaction (share or asset deal). In addition, the seller can eliminate any legal weaknesses identified during the vendor due diligence process before the start of the transaction negotiations and thus significantly accelerate the transaction process.

In structured bidding processes, the vendor due diligence report provides prospective buyers with an overview of the legal situation of the target company. This reduces uncertainty on the buyer's side and can facilitate or accelerate the submission of purchase offers, thereby significantly shortening the transaction process.

Vendor due diligence offers the seller a number of advantages:

1. Identification of weak points: Through the audit, the seller can recognise weaknesses in their own company and eliminate them before the purchase or before a buy-side due diligence. This can optimise the sales process and protect the seller from unpleasant surprises.
2. Pricing and transaction form: The results of the vendor due diligence can provide a basis for pricing and for choosing the optimal transaction form (share or asset deal).
3. Acceleration of the transaction process: In addition, the seller can eliminate any legal weaknesses identified during the vendor due diligence process before the start of the transaction negotiations and thus significantly accelerate the transaction process.
4. Reduction of uncertainty on the buyer's side: In structured bidding processes, prospective buyers receive an overview of the legal circumstances of the target company by means of the vendor due diligence report. This reduces uncertainty on the buyer's side and can facilitate or accelerate the submission of purchase offers, thereby significantly shortening the transaction process.