CDD and VDD

Hi there,

Certainly, I'd be happy to give you an overview of the types of work and projects associated with Commercial Due Diligence (CDD) and Vendor Due Diligence (VDD) in the consulting industry:

Commercial Due Diligence (CDD):

• Market Assessment: CDD projects often involve assessing the target company's market and industry.
• Conduct primary and secondary research, such as expert interviews, consumer surveys, and site visits.
• Perform qualitative and quantitative analysis, such as synthesizing customer perceptions or analyzing market size and growth scenarios.
• Create a business case or value creation plan with financials, which often involves heavy use of slide making and excel.
• Client engagement and interaction is not as high as other types of consulting projects, such as transformation projects.
• Typically, you'd have regular interactions with the private equity (PE) client and limited sessions with the target company's management.

Vendor Due Diligence (VDD):

• VDD projects are the opposite of CDD, as you work on behalf of the seller and make the case for the asset being a good buy from a buyer's perspective.
• The tasks involved in VDD are similar to CDD, with a focus on assessing the target company's market, industry, and financials.
• You'll conduct research, analysis, and create compelling presentations to showcase the value and potential of the asset to potential buyers.

The specific tasks can vary depending on the nature of the project, the industry involved, and the client's objectives. Consultants typically work in teams and engage in tasks such as data analysis, interviews with industry experts, and financial modeling.

Both CDD and VDD projects aim to provide a comprehensive understanding of a company's value, opportunities, and risks. However, CDD is often done by buyers to assess potential acquisition targets, while VDD is conducted by sellers to prepare a company for sale.

I hope this gives you a good overview of the tasks involved in these types of projects. If you have more specific questions or need further details, feel free to ask!

Warm regards, Raj

Hi,

Sharing some high level thoughts - I worked in BCG's PIPE practice.

• CDD → you are assessing whether a target business is a good investment for an investor (typically by helping them validate their investment thesis)
• VDD → the opposite, you are working on behalf of the seller and making the case that this asset is a good buy (from a buyers' perspective)
• The tasks that you will do are fairly similar for both CDD and VDD although there are some nuances
  • Conduct primary and secondary research
    • E.g. Expert interviews
    • E.g. Consumer survey
    • E.g. Site visits
  • Perform qualitative and quantitative analysis
    • E.g. Qualitative synthesis of customer's key perception of the target 
    • E.g. Quantitative analysis of market size and growth scenarios
  • Create a business case / value creation plan with financials
  • Typically very heavy on slide making and excel
  • Client engagement and interaction is not as high as other types of consulting projects (e.g. Transformation)
    • Typically you'd interact with the PE client weekly and have limited sessions with the target's Management

Happy to chat more - just drop me a dm.

All the best!

Hi there,

Certainly, I'd be happy to give you an overview of the types of work and projects associated with Commercial Due Diligence (CDD) and Vendor Due Diligence (VDD) in the consulting industry:

Commercial Due Diligence (CDD):

• Market Assessment: CDD projects often involve assessing the target company's market and industry. This includes analyzing market size, growth trends, competitive landscape, and potential barriers to entry.
• Customer Analysis: Consultants might analyze the target company's customer base, customer segments, and customer satisfaction to gauge the strength of customer relationships.
• Competitive Analysis: Evaluating the competitive landscape is crucial. Consultants assess key competitors, their market share, strengths, weaknesses, and strategies.
• Financial Analysis: Analyzing the target company's financial performance, revenue streams, cost structure, and profitability is a fundamental aspect of CDD.
• Risk Assessment: Identifying potential risks and challenges that the target company may face in the market is essential.
• Growth Opportunities: Consultants aim to identify growth opportunities and potential areas where the target company can improve its market position.

Vendor Due Diligence (VDD):

• Financial Analysis: Consultants conduct an in-depth financial analysis of the company being sold. This includes assessing historical financial performance and creating financial forecasts.
• Operational Assessment: Evaluating the target company's operations, including its supply chain, production capabilities, and efficiency.
• Quality of Earnings (QoE): Ensuring that the reported earnings of the company are of high quality and accurately represent its financial health.
• Legal and Compliance Review: Consultants may assess legal and compliance issues to identify any potential liabilities.
• Synergy Assessment: If the transaction involves merging with another company, consultants might assess the potential synergies and integration challenges.
• Asset and Liability Review: Evaluating the target company's assets and liabilities, including intellectual property, real estate, and debt.

The specific tasks can vary depending on the nature of the project, the industry involved, and the client's objectives. Consultants typically work in teams and engage in tasks such as data analysis, interviews with industry experts, and financial modeling.

Both CDD and VDD projects aim to provide a comprehensive understanding of a company's value, opportunities, and risks, but they serve different purposes: CDD is often done by buyers to assess potential acquisition targets, while VDD is conducted by sellers to prepare a company for sale.

I hope this gives you a good overview of the tasks involved in these types of projects. If you have more specific questions or need further details, feel free to ask!

Warm regards, Frederic

Hi there!

I'm sure you can get a decent definition on Google or chatGPT, so let me share instead a bit more about how these projects actually look like in consulting. 

DDs are usually 2-4 weeks long (80% of them are actually 3 weeks long). They tend to have a very specific objective, which is also necessary given the time. They often involve little client interaction - it's often the consultants in a room, plugging away at slides, analyses and calls with internal and external experts in order to form an opinion and recommendation for the client. 

They are also known as having the worst lifestyle of consulting projects - it's mostly driven by the short deadline of the project. Often, they involve weekend work. 

It's a great school though if you're at the start of your consulting career because after you do a few DDs, everything starts looking easier. I wouldn't recommend doing your DD as your first project though - I had this experience and it wasn't smooth.

Best,
Cristian

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Hi there,

Just to simplify, let's start from the basics:

CDD stands for buy side Commercial Due Diligence

VDD stands for Vendor Due Diligence, which is again a commercial Due Diligence

Both CDD and VDD assess the commercial attractiveness of the investment opportunity, but VDD is done for the sell side while CDD is done for the buy side. VDDs are usually longer than CDDs, because you get access to the management/ company data and access to the management, while during CDD in you have limited company internal data/ solely do outside in view.

Hope this helps,

Lilit

Hi there,

Ok, so both of these are due diligence. 

A CDD is pre-acquisition by the buyer while a VDD is pre-listing by the seller

A CDD will focus more on assessing market dynamics, growth potential, competition, and other commercial aspects. While a VDD concentrates on providing detailed financial, operational, and legal information about the company, addressing potential concerns upfront.