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name of the term: Sales Due Diligence
descriptions of the term:

Vertriebs-Due Diligence

Sales Due Diligence covers all aspects with regard to assessing the sales situation and is therefore often integrated in the broader Marketing Due Diligence as Sales Due Diligence or Distribution Due Diligence. The objective of Marketing Due Diligence is examining the attractivity of the markets and branches in which the acquisition target is active. In addition, it should provide information on the respective competitive position. In this context, it can be verified to which extent budgeting for the underlying preconditions can qualify as being realistic. Information sources for Marketing Due Diligence are internal data to ascertain sales and distribution structures, further external information such as market research analysis and, if necessary, discussions with industry analysts. Due to the often-heterogeneous conditions in the individual business areas, the audit procedures for the individual business areas should basically be conducted separately. The following exemplary information should be identified and evaluated: 

Information about the sector (selection):

  1. Structure of the sector: number of companies which stand in direct competition with the target company, size of these companies, concentration within the sector, important acquisitions or bankruptcies which led to, or could lead to, a change in the competitive relationships, grade of integration
  2. Sector growth: Sales, profit, other influential factors
  3. Market attractiveness analysis: Projected development of the market volume, identification of future growth markets, concepts to exploit the growth potentials, projected development of the market share, concept to defend or expand the market share, competitive situation
  4. Positioning within the sector


Sales (selection):

  1. General: Description of the sales organization, basic strategy in the sales area, major changes to this strategy in the past years, capacity utilization in the sales area, current order situation (amount, reach), existence of long-term delivery commitments at fixed prices, scale of practiced market research
  2. Customer/Sales structures: Customer structure, number of customers, dependence on customers (above 5% of turnover), sales structures (regional, national, international distribution of sales, export strategy and export share, seasonal sales fluctuations)
  3. Products/Product range: Product groups, main product groups (5% or more of total turnover), other products (less than 5% of total turnover), evaluation of sales structure, key figures to analyze the turnover/sales structure, ABC analysis of the product range
  4. Pricing: Identifying the importance of the sales price for selling products, price developments in the major sales markets, practiced price calculation processes, pursued price policies, price comparison with competitive products
  5. Communication policies: Advertising, evaluation of the PR work, sponsoring
  6. Terms: terms of payment, volume/major customer discounts, credits, bonuses, early payment discounts, terms of sales and delivery, (voluntary) liabilities and guarantee obligations
  7. Distribution: Sales organization, distribution type and sales channels differentiated by products and regions, distance to key clients

Type of term: definition
Language of the term (2 char ISO code): en
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