Vendor assistance and vendor due diligence
Vendor assistance and vendor due diligence can provide sellers with more control over the sale process through addressing the key concerns and issues that may be relevant to a purchaser. Ultimately this can help to protect value or even secure a higher price for the business.
In recent years vendors have taken a greater degree of control when selling their company (or selling off certain parts of the wider business) leading to vendor assistance and vendor due diligence becoming increasingly common as part of the transaction process.
Vendor due diligence is commissioned by the vendor with the output being an in-depth report on the business' financial health and its future prospects. As the report is available to prospective purchasers with a duty of care given to the ultimate purchaser, it has many benefits for both the vendor and the purchaser.
For the vendor, it can give more control over the sale process and the timing of sale as well as reducing disruption to the business. It adds credibility to the facts, figures and information provided to prospective purchasers and can lead to the early identification of value-critical issues which can be addressed before going to market.
With regard to purchasers, the information and analysis enables them to make a more informed decision. Purchasers have greater certainty over the nature of the business, its financial health and future prospects helping them with pricing decisions. In addition as they can rely on the vendor due diligence report this removes the necessity for ‘full scope’ buy-side initiated financial and tax due diligence. This can reduce uncertainty risk for some buyers, potentially leading to higher offers.
Our corporate finance specialists work alongside the management of the company, with a high level of involvement from our most senior people. Our approach is flexible so that key areas are prioritised meaning that opportunities and issues are understood and addressed early on.
Vendor assistance is potentially more suitable in situations where the likely purchasers are trade buyers and it can be less time consuming that full scope vendor due diligence. The key difference is that vendor assistance is provided for the benefit of the vendor only.
At Mercer & Hole we have the experience and expertise to provide vendor assistance and vendor due diligence, please contact me or a member of our Corporate Advisory Team if you would like to discuss this in further detail.
Date: 23rd March, 2018
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