ABSTRACT
Commercial Due Diligence (CDD) is all about understanding customers and markets. The idea that acquirers should investigate the customers and markets of the companies they were buying did not really take off until the early 1990s. Key to the development of CDD in the UK was the Ferranti story. Ferranti was a sizeable, publicly quoted, defence electronics company with sales of about £800 million. In 1987, it purchased a US defence electronics company called ISC. CDD is sometimes seen as market due diligence. A typical financial due diligence (FDD) exercise includes an analysis of the market and competitors and reviews profit forecasts. In one investigation of a tired UK brand, CDD very quickly discovered that all the major supermarkets wanted to stop stocking it. CDD had shown that Public Key Infrastructure, to give the Baltimore product its proper name, was too complicated to implement. CDD provides the most important insights on the future of the target and the merged entity.
