Our Commercial Due Diligence (CDD) goes beyond generic market reports—and provides exactly the insights needed to make informed investment decisions.
We support private equity funds and industrial companies in the machinery and plant engineering sectors, as well as in related service and software businesses, by providing a thorough assessment of target companies’ market and competitive positions. By analyzing market conditions, industry structures, regulatory influences, and competitive dynamics, we establish a solid foundation for investment decisions.
Analysis of the Market and Competitive Environment
Our commercial due diligence not only examines markets at the industry level but also analyzes relevant sub-segments, competitive dynamics, and growth potential. This results in a deep understanding of the market that goes beyond traditional market analyses.
Evaluation of the Business Model and Performance
In addition to the market analysis, a detailed assessment of the company’s business model and operational performance is conducted. This includes, in particular, an analysis of customer and supplier structures and their evaluation based on key financial performance indicators.
Identification of Opportunities and Risks
A key component of our commercial due diligence is the structured identification of opportunities, risks, and potential for value creation. This provides investors with a realistic assessment of the target company’s market position and future growth prospects.
The basis for well-informed investment decisions
Our commercial due diligence provides the information that investment committees and decision-makers need to make sound investment decisions. The goal is to identify risks early on, realistically assess growth potential, and thoroughly validate investment theses.
Our approach
Generic market reports rarely answer the question that really matters when making an investment decision. Our commercial due diligence does—at the sub-segment level, not the industry level. For us, “mechanical engineering” isn’t an industry, but rather a multitude of niches that we know in detail.
Since we are already familiar with many segments, companies, and competitive dynamics before a project begins, we can arrive at a reliable assessment more quickly than providers who first have to familiarize themselves with the market and segment—a decisive advantage in competitive processes. If necessary, we supplement management interviews with independent assessments from our network of more than 100 senior industry experts, including former CEOs and engineering directors.
In doing so, we work closely with our clients and other advisors—particularly in the context of financial due diligence. This results not only in an assessment of the current situation but also in a solid foundation with concrete value-enhancement levers to support investment decisions.
Context within the Transaction
Commercial due diligence can be based on an upstream pre-acquisition strategy and lays an important foundation for subsequent services such as value enhancement and post-merger integration. The insights gained thus support not only the valuation of the target company but also the successful execution of the investment.
Do you have questions about the process, duration, or costs of commercial due diligence? You can find answers to frequently asked questions in our FAQ on Commercial Due Diligence.
Frequently Asked Questions About Commercial Due Diligence
What exactly does A&P examine during a commercial due diligence review?
A&P’s commercial due diligence assesses the target’s market position, competitive dynamics in the relevant sub-segment, the quality of customer relationships, and the resilience of the revenue base. It also examines market conditions, industry structure, and regulatory frameworks. The commercial findings are correlated with the target’s relevant financial performance metrics; customer and supplier structures are analyzed together and incorporated into the assessment of the business model.
How is the business plan reviewed as part of a commercial due diligence process?
Commercial due diligence breaks down the business plan into its commercial drivers and evaluates each one individually against the market: segment growth, price and volume effects, order backlog, customer loyalty, and competitive position. The result is not merely a confirmation of the plan, but an independent assessment of which portion of the growth is market-driven, which assumptions are critical, and where additional upside or downside risks lie.
Why isn't a general market report sufficient for a mechanical engineering target?
A general market report often does not suffice for commercial due diligence in the mechanical engineering sector because the industry consists of a multitude of niche markets. A target company does not simply “build machines,” but rather, for example, rotary transfer machines, end-of-arm tooling, or form-fill-seal machines for powdered food products. At this level, standard reports often provide aggregate data that does not reflect either the competitive position or the pricing dynamics of the specific target company. A&P therefore conducts its analysis at the sub-segment level.
Who does A&P speak with during a commercial due diligence process?
During a commercial due diligence process, A&P speaks with customers, suppliers, and industry insiders, drawing on a network of over 100 senior industry experts, including former CEOs and engineering directors. Interviews with the target company’s management are just one component; the picture only becomes reliable through triangulation with market participants outside the company.
How quickly can A&P deliver in a competitive bidding process?
A&P schedules commercial due diligence during the bidding process in accordance with the respective deadlines. In many relevant segments, A&P already possesses a deep understanding of the market and competition, which significantly shortens the onboarding phase. Interim reports are scheduled so that key findings can be incorporated in a timely manner into pricing, investment decisions, and negotiations.
How does A&P factor AI disruption into a target company's business model?
Whether AI can replace, devalue, or standardize parts of a target’s value creation is a particularly relevant valuation question when it comes to industrial software and service-intensive business models: How resilient is a software or data moat, which services can be automated, and which functions might customers be able to handle themselves in the future? A&P assesses these risks—where they are relevant to the investment thesis—in collaboration with market and technology experts.