Commercial Due Diligence
A draft-cover reference for UK mid-market CDD: seven-chapter spine, scope-to-email builder, fee anchors and the eleven-day timeline a senior associate is actually on.
Commercial due diligence (CDD) is the independent commercial review a buyer commissions before signing an M&A deal. A UK mid-market CDD covers seven chapters: market sizing, customer diligence, competitive landscape, operations, financial-commercial bridge, risk register and synthesis. Boutique mandates cluster £15–25k over 3–5 weeks; Big-4 deal-advisory mandates cluster £75–150k over 5–8 weeks. Source: ICAEW Corporate Finance Faculty; BVCA Industry Activity 2025–26.
- I.→Market SizingTAM/SAM/SOM triangulated top-down and bottom-up; ONS and Companies House sources.
- II.→Customer DiligenceNPS, win-loss, churn cohorts. 15-20 customer references the defensible floor.
- III.→Competitive LandscapeCompetitor map, share of wallet, switching costs. 2x2 only if it survives the partner pen.
- IV.→Operations DiligenceCapacity, unit economics, operations bridge. Where CDD hands off to ODD.
- V.→Financial-Commercial BridgeRevenue and EBITDA bridges reconciled to QofE workbook.
- VI.→Risk RegisterRed-flag taxonomy; red/amber/green scored on a one-page register.
- VII.→SynthesisInvestment thesis stress-test and the one-page IC summary.
CDD is the commercial leg of the diligence tripod (financial / commercial / legal). It tests whether the target’s revenue is real, repeatable and defensible. It does not opine on accounting policy (QofE) or contract risk (legal). The scope is the chapter list in the spine above; the question every chapter answers is “does the IC memo claim survive contact with primary evidence?” Source: ICAEW Corporate Finance Faculty.
Buy-side CDD is commissioned by the financial sponsor (PE) or trade buyer. Sell-side vendor CDD (VCDD) is commissioned by the seller pre-process to compress buyer diligence and shorten the timetable. UK PE deal flow ran into the second half of 2025-26 at the volumes the BVCA tracks under Industry Activity. See /types/vendor-vcdd/.
For a £40-80m PE-backed bolt-on, the live trade-off is sector depth (boutique) against brand-risk cover (Big-4). Boutique mandates cluster £15-25k over 3-5 weeks; Big-4 deal-advisory mandates run £75-150k over 5-8 weeks with broader scope and a partner’s reliance letter familiar to syndicated lenders. Pick by what the IC actually challenges. See /providers/big-four-vs-boutique/.
The persona case here is the senior associate with eleven working days to a draft red-flag chapter set. The 11-day timeline splits scoping (days 1-2), primary research (3-5), triangulation (6-8) and drafting (9-11), with the partner-review loop opening day 6. See /playbook/.