Who are commercial due diligence providers?

Valuation and due diligence are two of the most important aspects of a successful acquisition. Since every business is unique, a valuation will vary depending on its industry, target market, and growth trajectory. Before you sign any contracts with your new partner, however, it's important to understand what makes their company so valuable in the first place. That's where a commercial due diligence provider comes in!

Commercial due diligence is the process of evaluating a business, investment opportunity, or transaction. It helps you understand the strengths and weaknesses of a company. In addition, it helps you understand the potential for future growth and profitability. Often, commercial due diligence is completed before signing an agreement to buy or sell a company. However, if your own business is being evaluated by another party in connection with an investment opportunity or a merger, it’s also possible that you will be asked to complete a commercial due diligence investigation yourself. This is referred to as self-commissioned commercial due diligence.

The term “commercial due diligence” can be applied broadly across many industries including:

• Commercial real estate (CRE) brokerage firms conducting pre-transaction investigations on behalf of their clients
• Private equity firms performing preliminary assessments before purchasing controlling interests in public companies through leveraged buyouts (LBOs)
• Hedge fund managers initiating research into possible investments
• Market research firms conducting commercial due diligence to evaluate aspects of an investment decision 

Private equity fund managers conduct due diligence on portfolio companies to assess risks and opportunities prior to investing in them. In addition, banks also evaluate potential mergers or acquisitions of other financial institutions. Learn more about due diligence here.

Choosing the right commercial due diligence providers for your company

Now that we've discussed a little about commercial due diligence providers, let's talk about how to choose a commercial due diligence provider for your company. You should consider the following factors when choosing a commercial due diligence provider:

• Is the company experienced in your industry?
• Does it have experience in your country?
• Does it specialise in your type of business (for example, small-to-medium-sized businesses or large multinational corporations)?
• Are they experienced with your project or area (for example, an M&A sale)?
• How long have they been in business?
• Do they have a good reputation and references?
• Are their fees reasonable for your needs?

If you're on the hunt for selecting a survey provider for your company then, we've got a dedicated blog post on that topic. Check out our guide - 'Selecting a survey provider for your company: Tips and Suggestions' to learn more about selecting survey providers. You can also learn more about the term here.

What do commercial due diligence providers do?

Companies that require a commercial due diligence provider to conduct their review for them will find that the service offers a comprehensive overview of the target company. The provider’s professionals will review all financial and legal documents, as well as the company’s management team, business model, and risk assessment. Additionally, they will provide a list of potential issues with the target company.

The provider will also provide a list of all the company’s outstanding litigation and regulatory issues, as well as its financial performance over the past years. In addition, they will provide an overview of the target company’s current business strategy and its plans for growth. Since the term, commercial due diligence is very broad, it also applies to market research. In the context of market research, commercial due diligence refers to evaluating all aspects of an investment decision through the means of market research. 

Let's talk about commercial due diligence providers in the context of market research. Usually, the first step in conducting commercial due diligence in market research is starting out with a questionnaire.

A commercial due diligence questionnaire is a set of questions designed to help a company evaluate decisions. This is done in many different types of business transactions. Therefore, each survey will be uniquely designed according to the purpose of the research project. However, a CDD survey is just one part of the picture of conducting due diligence. Oftentimes, a CDD report is also prepared at the end of a commercial due diligence survey. 

Additionally, there are different types of commercial due diligence surveys. Broadly, they can be put into two main categories. B2C surveys have data about a company’s consumers. They can also address consumer acquisition or retention strategies or even sales channel development.

On the other hand, you can also conduct company-wide commercial due diligence surveys. For instance, a consulting company wants to find out how employees react to certain training that are run in the organisation. If the consulting company wants this information from a number of people across multiple organisations, it can then run a commercial due diligence survey. To add to this, the company can add employee headcount, recruitment policies, stock options, pension plans, etc.

Why do you need a commercial due diligence provider?

While commercial due diligence is a relatively new field, it's already become essential to many businesses. A thorough commercial due diligence can uncover hidden liabilities and risks that you might not have been aware of before an investment decision. This can help you avoid costly mistakes and make better-informed decisions about your investment. A commercial due diligence provider acts as a bridge between companies that need to conduct market research and survey respondents. The following are some advantages of commercial due diligence providers:-

1. Hiring a commercial due diligence provider frees up more resources for your company. A market research provider makes the task of finding respondents, collecting data, and analysing responses really simple. In this way, your company can then focus on its core business operations. 
2. A commercial due diligence provider also specialises in the realm of market research. By hiring a CDD provider, you're hiring an expert in their field who can optimise the process of market research for you.
3. A CDD provider can get you the right data from the right individuals quickly. Instead of spending a lot of time finding respondents for a study, you can leverage commercial due diligence providers. Typically, a good provider will have cutting-edge technology that can optimise the process of market research for you. 
4. Last but not least, a CDD provider will connect you to niche populations. Finding respondents that are relevant to your commercial due diligence project can be tough. Luckily, commercial due diligence providers can reach respondents in niche audiences. The task of finding vetted survey respondents is thus made simpler through these providers. 

How can we help you find commercial due diligence providers?

The topic of commercial due diligence providers is a broad one, and the companies that offer these services are numerous. It can be difficult to know where to start when looking for a provider, but this post has given you an idea of what to look for as well as some practical steps you can take so that your company gets the most out of its provider.

Once again, it's important to remember that good due diligence costs money but saves time and energy down the road.

Commercial due diligence is a process that can take anywhere from a few days to several months depending on the complexity of the property and your needs. When you hire an expert commercial due diligence firm, they'll usually work with you to evaluate all aspects of an investment decision. This is one of the reasons why it's worth the investment.

Still need more information about commercial due diligence? We are here to help. We know that running a commercial due diligence project can be a daunting process. At GrapeData, we deploy a combination of AI and hyper-personalised targeting to gather in-depth insights from individuals anywhere in the world. How do we do this? We've developed an app where we have contributors from 100+ countries. Our contributor network (now consisting of 370k contributors) can help you get the right data for your commercial due diligence project.

If you'd like more information on commercial due diligence providers, check out our How It Works page. Alternatively, we'd be happy to have an initial call to discuss your data needs, reach out to us at sales@grape-data.com. 

Conclusion

If you’re looking for a partner to help you through the commercial due diligence process, we hope this guide has been helpful. We want to make sure that our clients get the best service possible, so we focus on providing only high-quality companies with strong reputations and backgrounds in business. So if you think one of our experts might be able to assist with your needs, feel free to reach out with any questions or concerns so we can talk more about what makes sense for your company.