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The difference between work scope of Commercial Due Diligence (CDD) and work scope of Financial Due Diligence (FDD) can be realized on the ‘Cause-Effect Matrix’. Relationship between CDD and other due diligence has been introduced in earlier statements.
This article gives a brief introduction about the difference between CDD and FDD.
Investigating whether the financial reporting of subject truly and fairly reflect the company’s operation performance belongs to FDD. Findings and conclusions of FDD will be integrated in the adjusted financial reporting. Then, this would be the basic information that can be used in valuation.
CDD should be conducted on the basis of FDD. Only analyzing past financial information and understanding how the current performance is achieved can analysts estimate future ability of creating value.
Therefore, work scope of CDD is to analyze subject’s past and future mechanism which is ued for creating value through understanding the value created in the past. The following valuation work requires analysts figuring out the total value could be created in the future on the basis of the earlier findings.
Shanghai Huaran Investment Consulting Co, Ltd is led by partners with more than 20 years of cross-border M&A and investment experience. Our team consists of financial advisors and industrial experts with in-depth understanding of M&A transactions. Huaran is devoted to provide Strategy Consulting, M&A Advisory, Post-merger Integration Solution and Commercial Due Diligence services to financial institutions, MNCs and domestic enterprises.
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