Commercial Due Diligence Checklist

Why commercial due diligence matters

A transaction can look sound on paper and still fail on commercial reality. This is the work of testing whether the target's revenue, margins, and growth expectations hold up against the market it operates in. This checklist helps you do that systematically, so that the picture you build of the target is based on its records, strategies, and operational data rather than on assumptions. It covers the market and competitive position, the customers, the sales and marketing machinery, the products, the supply chain, the pricing, the routes to market, the legal and intellectual property position, the financials, the people, the contracts, and the operational processes, together with a forward view of strategy and integration.

What a good commercial due diligence assessment covers

- **Market and competitors.** Market analysis and industry trends, plus a competitive landscape and SWOT analysis. - **Customers and demand.** Customer base assessment and segmentation, and a review of customer contracts and key agreements. - **Commercial functions.** Sales and marketing strategy, product and service portfolio, pricing strategy and profit margins, and distribution channels and route to market. - **Supply side.** Supply chain and supplier network evaluation. - **Legal and intellectual property.** Regulatory compliance and legal considerations, and the intellectual property and patent portfolio. - **Financials and people.** Financial performance and revenue projections, and an assessment of the management team and key personnel. - **Operations and conduct.** Operational efficiency and process optimisation, and compliance standards and ethical business practices. - **Forward view.** Business strategy and future growth outlook, and post-acquisition integration and synergy identification.

Running the assessment

Set up the review before you begin by recording the date, the preparer, and the location. Then work through the assessment areas in turn, using the status choices to keep track of where each one stands: Completed, In Progress, Not Yet Started, or Not Applicable. Anything unresolved should stay visible rather than be closed off prematurely. The additional notes, observations, and recommendations section is where you set out what you found and what you advise. Finish with the completion summary and signature, and record the actual start and end dates so the timeline of the review is clear.

A note on regulatory and legal review

Regulatory compliance, legal considerations, and intellectual property sit inside a commercial review because they shape what the target can sell, where it can sell it, and what it owns. Where a named regulation or standard applies to the target, identify it plainly and assess the target against it rather than assuming compliance. The checklist does not set out the requirements of any specific regime, so the assessment should be grounded in the target's own records and the rules that actually apply to its operations.

Frequently Asked Questions

Commercial due diligence is the structured evaluation of a target company's commercial viability: its market, competitive position, customers, sales and marketing approach, products, pricing, distribution, and growth outlook. You conduct it to confirm whether the business can sustain and grow the revenue and margins assumed in a transaction, rather than to check its books alone.

Working through the assessment prompts forces you to look at the market, the competitive landscape and SWOT, customer segmentation, sales and marketing strategy, the product and service portfolio, the supply chain and supplier network, pricing and profit margins, distribution channels and route to market, regulatory and legal considerations, intellectual property, financial performance and revenue projections, management and key personnel, customer contracts and key agreements, operational efficiency, compliance and ethical business practices, business strategy and future growth, and integration and synergy potential. Each area is recorded as Completed, In Progress, Not Yet Started, or Not Applicable, with notes, observations, and recommendations captured alongside.

Start by recording the assessment date, who prepared it, and the location, and by following the instructions in the template. Work through the assessment items, marking each Completed, In Progress, Not Yet Started, or Not Applicable as you go, and use the notes, observations, and recommendations section to record anything that needs explanation. Where the transaction requires it, review regulatory compliance, legal considerations, and intellectual property alongside the commercial items. Close out with the completion summary and signature, and record the actual start and finish dates for the review.

An answer of Not Applicable is available for items that do not bear on the target, but it should be a considered conclusion rather than a way to leave an area unexamined. Financial performance, customer contracts, and compliance items in particular should only be marked Not Applicable where there is a clear reason recorded in the notes.

Written by

Arne Reis

Founder

Process optimizer with 25 years of expertise, focused on operational excellence in quality, maintenance, EHS, and commissioning. Emphasizes innovative solutions and top-quality standards.

View LinkedIn profile