What is Vendor Due Diligence?

Definition

Vendor Due Diligence (VDD) is a due diligence review commissioned by a seller before launching a transaction process. Unlike traditional buyer-led due diligence, the seller controls the scope and timing of the review.

VDD provides potential buyers with an independent assessment of financial, commercial or operational aspects of the business and can accelerate the transaction process.

It is commonly used in competitive auction processes where sellers want to provide transparency and increase buyer confidence.

Why it matters

Vendor Due Diligence helps sellers prepare for buyer scrutiny and can improve transaction efficiency.

In practice

A financial VDD report allows potential buyers to better understand historical performance and reduces duplication during the later stages of due diligence.