Vendor due diligence

Vendor due diligence (VDD) is a financial (and sometimes legal and tax) due diligence commissioned by the seller ahead of a sale process, to present potential acquirers with an independent analysis of the company. It accelerates the sale process (acquirers rely on the VDD rather than conducting full independent analysis from scratch), enhances information credibility and enables the seller to identify and resolve issues proactively. It is particularly used in private equity fund exits, highly competitive processes and complex transactions requiring significant analysis effort from multiple buyers simultaneously.

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Example: in the sale of a Franco-Swiss services group for CHF 40.0 million, the vendor mandates Hectelion for a VDD covering: quality of earnings (normalised EBITDA CHF 4.2 million vs CHF 3.8 million reported), working capital analysis (CHF 3.1 million normalised), adjusted net debt (CHF 8.5 million) and 3-year business plan review. The VDD, provided to each of 5 shortlisted acquirers, reduces their own due diligence duration from 8 to 3 weeks — accelerating the path to binding offers.

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Hectelion conducts vendor due diligences for sellers seeking to accelerate their sale process and maximise transaction value.

To prepare a sale under good conditions, it is advisable to have a vendor due diligence performed by an independent firm, in France as in Switzerland.