ABSTRACT
A company is acquired for its future profits. Commercial due diligence is all about assessing a target's future performance by looking at its market prospects and competitive position. Commercial due diligence can be structured so as to give comfort that the deal will actually work by assessing the likely strategic position of the entity post-acquisition and its ability to achieve sales growth through price increases, sales increases or both. Commercial due diligence does not have to be carried out after Heads of Terms have been negotiated, although it is much quicker and easier with target management's blessing and official access to customers and other contacts. Commercial due diligence is a process which can be applied to industries almost universally. The main drawbacks of secondary information, timeliness and specificity, are countered in commercial due diligence by talking directly to people operating in the target's market, especially customers.
