I’m interested in hearing from your experience whether commercial due diligence is regularly done during the due diligence process stage of the transaction. I’ve never actually seen this done at this stage. Primarily, the targets may be from an industry which acquirers is already involved and therefore there is the belief that they have the commercial information necessary or acquirer is acting on prior advice of a strategic advisor who would have identified the industry or possible targets.
Very nice thoughts you had! Actually, I’m passing through a M&A process where I need to make some part of commercial Due Diligence prior to NDAs and LOIs signatures, and also prior to opening the buy side name.
Here in Brazil in some sectors we have class association organizations that “provide” to associates information’s concerning the market. Some market information about companies should give a lot of help regarding to target selection, commercial due diligence and valuing the asset.
Commercial due dilligence may depend on the industry as many times basic information exists either from the market or from associations of the industry.
But I believe that for a deeper level of information you need to conduct the DD in order to be certain that what you know is correct e.g. market share of an existing product line, customers data, price lists and potential terms to uncover and also a commercial due dilligence is a good opportunity to form an opinion based in facts from the commercial organisation of the target ie Commercial managers, sales force who at an advanced stage of the deal may be willing to disclose practices that you would never be able to find out before.
I would never rely only on stratgic advisors…my own view and deep understanding of the market is a must.
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