Pre-DD / Vendor Due Diligence
Finding the red flags before the buyer does — and defending the value those red flags would otherwise have cost.
Typical engagement
When this earns its keep
Value defended in recent work
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The Situation
A transaction process is being lined up. The business has a story — growth, margin trajectory, customer concentration improving, a strategic logic that justifies a strong multiple. The story is true.
But buyers don’t buy stories. They buy numbers, and they apply DD scrutiny designed to find every reason to chip the price. Revenue recognition that hasn’t been stress-tested. EBITDA add-backs that won’t survive challenge. Working capital normalisation. Customer concentration calculated the way the buyer’s analyst will calculate it, not the way the management deck shows it. Quality-of-earnings issues that look small from the inside and large from the outside.
Every one of these is a discount on the valuation — and every one of these can be defended or remediated before the buyer ever sees it.
What we build
A vendor-side DD review that walks every line the buyer’s DD team will walk.
We rebuild adjusted EBITDA bottom-up, with each add-back documented and stress-tested for defensibility. We test revenue recognition policy against the contracts and against industry practice. We rework the working capital normalisation against the buyer’s likely methodology. We pressure-test customer concentration, churn, gross margin trends, and any operational metric the buyer will model into their offer.
Where we find genuine red flags, we surface them early and lay out remediation paths — some can be fixed before process opens, some need to be disclosed and framed, some need to be priced into expectations. The CFO and the sponsor walk into the process knowing exactly what the buyer will find and how to respond.
The output is a clean fact base, a defensible adjusted EBITDA, and a written set of likely DD challenges with prepared responses.
What you get
Valuation defended. Recent work has prevented buyer-side challenges that would have chipped headline value by around 30%. The earlier this work happens, the more there is to defend.
A faster, less painful process. DD goes more smoothly when the buyer’s findings have already been considered. Surprises during exclusivity are the most expensive surprises there are — this work removes them.
Confidence at the negotiating table. The CFO and the sponsor know which lines are defensible, which are negotiable, and which need to be conceded — before the buyer raises them.
A cleaner business at the end either way. The remediation work has value whether or not the transaction happens.
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