Vendor Due Diligence (VDD) is a strategic process conducted by the seller of a company ahead of a potential M&A transaction or fundraising. It gives the seller control over the narrative, accelerates the deal process, and maximizes value by identifying technical and product risks early.

Vendor Due Diligence refers to an independent audit commissioned by the seller to assess the technical, product, legal, or financial health of the company prior to an acquisition or investment. It is conducted before the buyer’s own due diligence phase, enabling the seller to uncover and address weaknesses before going to market.

In the context of technology and product, a VDD examines:

• Architecture & infrastructure quality
• Security vulnerabilities
• Code performance & scalability
• Product-market alignment
• Team maturity and delivery capacity

‍

Vendor Due Diligence is critical in the M&A process for tech-driven companies. Here's why:

• Accelerates transactions: Buyers have fewer surprises and can make quicker, more confident decisions.
• Maximizes valuation: Sellers resolve issues in advance, reducing price negotiations or discounts.
• Builds trust: Presenting a third-party audit shows transparency and professionalism.
• Reduces post-deal risk: Buyers are less likely to face hidden technical debt or integration challenges.
• Increases buyer competition: A clean, vetted asset attracts more serious bidders.

‍