Commercial Due Diligence (CDD)

FOSTEC & Company has in-depth knowledge of various relevant digitization and E-Commerce industries. The spectrum of knowledge ranges from software solutions for corporate digitization to classic E-Commerce topics and digital business models.

In the course of accompanying numerous transaction projects, FOSTEC & Company has gained experience with different types of investors and financial sponsors (PE, VC, family offices) and has valuable project know-how regarding investment sweet spots of different sizes, from specialized small cap funds to global large cap investors.

Figure 1: Due Diligence industry expertise of FOSTEC & Company

The execution of a Commercial Due Diligence follows a two-phase project approach. Phase I of Commercial Due Diligence (CDD) includes the development of a Red Flag Report, which aims to identify or rule out major risks related to the target company’s business model. In addition to the business model, the product range, sales funnels and order intake are evaluated, and sourcing and supply chain performance are assessed. Detailed evaluations are also made for customer performance by individual sales channels and product categories. The Red Flag phase also looks at the organizational structure and the competencies of key personnel.

Phase II of Commercial Due Diligence (CDD) focuses on the preparation of the Confirmatory Due Diligence Report, with the aim of providing deep insights into the company’s operations and business plan. FOSTEC Market Intelligence is used to quantify and evaluate the potential of the main sales channels. A central component is also the evaluation of the maturity level of the current and planned IT infrastructure and associated processes. The second phase of Commercial Due Diligence (CDD) is completed with the evaluation of the business plan in terms of revenue and EBITDA forecasts, including a logic check based on the results of the due diligence.

Figure 2: Commercial Due Diligence project approach

The service portfolio of due diligence services includes services of varying scope and focus. FOSTEC & Company offers 360-degree due diligence services to analyze all aspects of the business: Commercial Due Diligence (CDD), E-Business Due Diligence (EDD), IT & Technical Due Diligence (TDD), HR & People Due Diligence (HRDD). Detailed information to all Due Diligence Services: