1. CommercialDue diligence consultationDefinition and purpose

Business due diligence consulting (CommercialDueDiligence,CDD) refers to the comprehensive, in-depth and objective evaluation and analysis of the market, competition, operation, finance, law and other aspects of the target enterprise or project before the investment, merger and acquisition, cooperation and other business decisions, so as to help customers identify opportunities and risks and formulate reasonable strategies and plans. The purpose of the commercial due diligence consultation is to provide the following information and advice to the client:

The market positioning, competitive advantage, growth potential and profitability of the target enterprise or project;

The industry environment, market scale, market trend, market demand, market segmentation, market share, market competition, market opportunity and market risk of the target enterprise or project;

The operation status, operation mode, operation efficiency, operation risk and operation improvement space of the target enterprise or project;

The financial position, financial indicators, financial risks and financial forecasts of the target enterprise or project;

The legal status, legal compliance, legal risks and legal safeguards of the target enterprise or project;

Value assessment, return on investment, investment risk and investment advice for the target enterprise or project.

The results of commercial due diligence consulting are usually presented in the form of a due diligence report, which is a formal document submitted by the consulting firm to the client and contains the purpose, scope, methodology, data sources, analysis process, and analysis of due diligence.Conclusion, proposals, etc., as well as related data tables, charts, appendices and other supporting materials.

2. CommercialDue diligence consultationMethods and tools

Commercial due diligence consulting is a complex system engineering that requires the use of a variety of methods and tools to ensure the quality and efficiency of due diligence. The following are the methods and tools commonly used by consulting firms in commercial due diligence consulting, as well as their roles and characteristics:

Data room (DataRoom): A data room is a dedicated data storage and sharing platform established for due diligence purposes, either a physical data room or a virtual data room. The role of the data room is to provide the due diligence team with relevant information about the target company or project, including financial statements, contracts, policies, market reports, industry analysis, competitor information, etc. The data room is characterized by security, convenience and efficiency, which can protect the confidentiality of data and facilitate the data acquisition and analysis of the team.

Financial Model (FinancialModel): A financial model is a mathematical model used to predict future financial position and performance based on the financial data of the target enterprise or project. The role of the financial model is to provide the due diligence team with a financial assessment of the target enterprise or project, including financial indicators, financial ratios, financial risks, financial forecasts, etc. Financial models are characterized by science, logic, and flexibility, allowing financial analysis and simulation based on different assumptions and scenarios.

Market research (MarketResearch): Market research refers to the process of collecting, sorting, analyzing and interpreting market-related information to understand the market environment and market demand of the target enterprise or project. The role of market research is to provide the due diligence team with a market assessment of the target company or project, including market size, market trends, market segmentation, market demand, market competition, market opportunities and market risks. Market research is characterized by extensive, in-depth and objective, and can obtain market information and insight from multiple channels and angles.

Competitive Analysis (CompetitiveAnalysis): Competitive analysis refers to the process of understanding the competitive advantages and disadvantages of a target enterprise or project by collecting, collating, analyzing and comparing information about the main competitors of the target enterprise or project. The role of competitive analysis is to provide the due diligence team with a competitive assessment of the target company or project, including the competitor's basic situation, strategic direction, product characteristics, market performance, financial position, strengths and weaknesses. Competitive analysis is characterized by pertinence, contrast and dynamics, and can evaluate the competitiveness of the target enterprise or project from different dimensions and levels.

SWOT analysis (SWOTAnalysis):SWOT analysis refers to the process of analyzing the strengths (Strengths), weaknesses (Weaknesses), opportunities (Opportunities) and threats (Threats) of a target enterprise or project based on its internal and external environment. The role of SWOT analysis is to provide the due diligence team with a comprehensive assessment of the target enterprise or project, including the core competitiveness, development potential, growth barriers and risk response of the target enterprise or project. The characteristics of SWOT analysis are simple, intuitive and comprehensive, which can sort out the advantages and disadvantages and opportunities and threats of the target enterprise or project from different angles and levels.

Risk assessment (RiskAssessment): Risk assessment refers to the process of identifying, analyzing, evaluating and managing the various risks that a target enterprise or project may face based on various information. The role of risk assessment is to provide the due diligence team with a risk assessment of the target enterprise or project, including risk type, risk level, risk impact, risk probability, risk control and risk response. The characteristics of risk assessment are comprehensive, systematic and preventive, which can identify and manage risks from multiple angles and levels.

Sensitivity Analysis (SensitivityAnalysis): Sensitivity analysis is the process of analyzing the sensitivity of the future performance and value of a target enterprise or project to certain key factors based on its financial model. The role of sensitivity analysis is to provide the due diligence team with a sensitivity assessment of the target enterprise or project, including sensitive factors, sensitive scope, sensitive results, and sensitive recommendations. Sensitivity analysis is characterized by sensitivity, change, prediction, performance and value analysis and simulation from different assumptions and scenarios.

Valuation method (ValuationMethods): A valuation method is a method of calculating the reasonable value of a target enterprise or project based on its financial and market data. The purpose of the valuation method is to provide the due diligence team with a valuation assessment of the target enterprise or project, including the selection of the valuation method, the determination of the valuation parameters, the process of valuation calculation and the presentation of the valuation results. Valuation methods are characterized by diversity, professionalism and subjectivity, and value can be calculated and compared from different perspectives and methods.

As-is-due-diligence report (DueDiligenceReport): A due-diligence report is a formal document submitted to the client by a consulting firm after the completion of a commercial due-diligence consultation, which contains the purpose, scope, methodology, data sources, analysis process, analysis of due-diligence.Conclusion, proposals, etc., as well as related data tables, charts, appendices and other supporting materials. The role of the due diligence report is to provide customers with a comprehensive, in-depth and objective evaluation and analysis of the target enterprise or project to help customers make reasonable business decisions. The characteristics of the due diligence report are formal, detailed and authoritative, which can demonstrate the professional competence and value of the consulting company.

3. CommercialDue diligence consultationThe case

In order to better illustrate the practical application and effectiveness of the methods and tools of commercial due diligence consulting, the following are some specific examples of clients of Champ Consulting Services:

Case 1: An international investment fund's investment in a well-known e-commerce platform in China. Shangpu Consulting provides comprehensive commercial due diligence consulting services for the investment fund, including the evaluation and analysis of the market, competition, operation, finance, law and other aspects of the target enterprise. Shangpu Consulting uses data room, financial model, market research, competition analysis, SWOT analysis, risk assessment, sensitivity analysis, valuation methods and other methods and tools to provide customers with a detailed due diligence report, including the target company's Market positioning, competitive advantage, growth potential, profitability, risk factors, investment value, investment advice, etc. The due diligence report of Shangpu Consulting helps customers have a comprehensive and in-depth understanding of the target enterprise and provides strong support for customers' investment decisions.

Case 2: A well-known domestic pharmaceutical group's merger and acquisition of a biotechnology company in the United States. Shangpu Consulting provides professional commercial due diligence consulting services to the pharmaceutical group, including the evaluation and analysis of the market, competition, operation, finance, law and other aspects of the target company. Shangpu Consulting uses methods and tools such as data room, financial model, market research, competition analysis, SWOT analysis, risk assessment, sensitivity analysis, valuation methods, etc. to provide customers with accurate due diligence reports, including the target company's market size, market trends, market opportunities, product characteristics, technical advantages, financial status, legal compliance, merger value, merger and acquisition plan, etc. The due diligence report of Shangpu Consulting helps clients have a clear and accurate understanding of the target company and provides effective guidance for clients' M & A decisions.

Case 3: A leading domestic auto parts manufacturer's strategic cooperation with a European auto parts supplier. Shangpu Consulting provides high-quality commercial due diligence consulting services to the auto parts manufacturer, including the evaluation and analysis of the market, competition, operation, finance, law and other aspects of the target supplier. Shangpu Consulting uses data room, financial model, market research, competition analysis, SWOT analysis, risk assessment, sensitivity analysis, valuation methods and other methods and tools to provide customers with a comprehensive due diligence report, including market segmentation, market share, market competition, product quality, technological innovation, operational efficiency, financial stability, legal risk, cooperation value, cooperation suggestions and other contents of the target supplier. The due diligence report of Shangpu Consulting helps the customer to have a detailed and objective evaluation of the target supplier, and provides a valuable reference for the customer's cooperation decision-making.

Conclusion

Commercial due diligence consulting is one of the important businesses of consulting firms, and it is also an important way to demonstrate the professional ability and value of consulting firms. This article shares the methods and tools commonly used by consulting firms in business due diligence consulting, including data rooms, financial models, market research, competitive analysis, SWOT analysis, risk assessment, sensitivity analysis, valuation methods, and due diligence reports. This paper also shows the practical application and effect of commercial due diligence consulting in combination with the specific cases of Shangpu consulting service customers. I hope this article can be helpful and enlightening to consulting companies and customers.