Commercial due diligence (CDD)

What is commercial due diligence (CDD)?

Commercial due diligence (CDD) is research before a deal into a company's market, customers, competitors and business plan, to test whether its growth case holds up. Advisers size the end markets, interview customers, suppliers and competitors, and compare management's forecast with peers. A buyer or lender usually commissions it; some sellers commission a vendor report that bidders can rely on.

Why it matters to a revenue leader

CDD is where a buyer decides whether the revenue story is real. The sales team's forecast, pipeline and win rates become evidence for or against the price. If you lead sales at a company being sold, your numbers will be set beside what customers say in interviews. If you join after a deal, the CDD report tells you what the owner believes about your market before you have formed your own view.

Before buying a facility services company, a buyer's advisers interview 25 customers. Several say they plan to consolidate vendors next year. The buyer lowers its growth assumptions, and the CRO who joins later inherits a plan built on that more cautious view.