Sourav Nath | Vendor Diligence

Vendor due diligence is a key step for companies and promoters that are looking to raise funds or undertake a secondary sale, as it streamlines the transaction process in terms of timelines and costs. In this podcast, our principal associate Sourav Nath discusses some of the key benefits of undertaking a vendor due diligence, both from a buyer and seller perspectives.

Transcript – Vendor Diligence

What is the purpose of a Vendor Due Diligence Process?

The purpose of a vendor due diligence process is to evaluate and verify the target company’s financial and legal status, as well as assess any potential risks associated with a potential transaction.


How is a Vendor Diligence different from traditional Legal Due Diligence?

  1. Vendor due diligence is undertaken by the seller whereas a legal due diligence is undertaken by the buyer;
  2. Timing of the due diligence;
  3. The buyer or the investor is able to identify the risk areas and focus on those during the transaction;
  4. Legal due diligence is more comprehensive.


How is Vendor Diligence helpful for Sellers in M&A and investment transactions?

  1. Speeds up the process;
  2. Allows the seller rectify deficiencies in advance;
  3. Allows the seller/ company to identify consent requirements well ahead of time;
  4. Provides an improved valuation; and
  5. Allows company to differentiate their offering from other potential targets of the buyer.


How would such Vendor Diligence help buyers/ investors?

  1. Provides investors with a crisp snapshot of the company;
  2. Enables the buyers/ investors to identify and focus on the risk elements quickly;
  3. Streamlines the process of legal due diligence;
  4. If required, a top up diligence can be done.