CDD is an objective enquiry to critique and challenge commercial matters relating to a business, including its business plan and financial projections.

The CDD practitioner’s commentary is based on evidence developed through analysis of the market, competitor and customer information, as well as the target entity’s business model and financial and commercial performance.

The CDD process can help:

• identify commercial risks and red flags;
• provide a critique of key assumptions in a target entity’s business plan;
• shape the target entity’s equity story; and
• offer insights to inform the client’s valuation.

CDD is typically undertaken in connection with a transaction, covering situations such as acquisitions, mergers, capital raises, management buyouts (MBO), leveraged buyouts (LBO), refinancings or restructurings.

This guideline is primarily aimed at CDD practitioners and those commissioning CDD services, but also includes considerations for management teams that are the subject of a CDD exercise.

Read the guideline to learn about:

• commissioning CDD and setting the scope;
• the roles and responsibilities of the CDD practitioner;
• key information sources in CDD;
• the impact of AI and new technologies on the CDD process;
• how findings are reported and used; and
• arrangements for third-party access to CDD findings.

Further reading:

• Deal explorers