Due Diligence

A comprehensive due diligence exercise commissioned and paid for by the seller of a business prior to a sale process, with the resulting reports made available to prospective buyers. VDD typically covers financial, tax, commercial, and legal matters and is prepared by independent professional advisors.

The rate at which a firm increases its output relative to its inputs over time. Productivity growth is a key indicator of operational efficiency and long-term competitiveness, closely linked to investment in intangible assets such as technology, training, and process improvement.

Total revenue divided by the number of employees, providing a high-level measure of workforce productivity and operational efficiency. Revenue per employee varies significantly by industry and business model, and is influenced by the level of automation and intangible asset investment.

An increase in the amount of capital available per worker, which typically raises labour productivity. In modern economies, capital deepening increasingly involves investment in intangible assets — software, data infrastructure, organisational capital, and human capital — rather than traditional machinery and equipment.

The planned method by which founders or investors intend to realise the value of their investment. Common exit routes include trade sale (acquisition), IPO, secondary sale, or management buyout.

The practice of comparing a company's performance metrics, processes, or practices against industry leaders or best-in-class peers. Benchmarking against productivity and intangible asset data helps firms identify gaps and prioritise investment.

The eXtensible Business Reporting Language, a standardised digital format for the exchange and analysis of financial and business information. XBRL is mandated by regulators in many jurisdictions for filing financial statements and enables automated analysis of intangible asset disclosures, impairment charges, and productivity metrics across large datasets.

A reduction in the reported value of an asset on the balance sheet, typically triggered by impairment testing that reveals the asset's carrying amount exceeds its recoverable amount. Goodwill and other intangible asset write-downs often signal that the expected future benefits from a prior acquisition or investment have not materialised.

What is a no-shop clause and how long is it typical?

A no-shop clause prevents the company from actively seeking alternative buyers or investors for a defined period (typically 30-60 days), giving the lead investor time to conduct due diligence.

What is an exclusivity period in M&A and how does it differ from a term sheet no-shop?

An M&A exclusivity period prevents the seller from soliciting or engaging with other buyers, typically lasting 30-90 days from LOI signature, longer than VC no-shop clauses.

How do venture capital investors evaluate your pitch?

VCs evaluate pitches across five dimensions: team (credibility, track record), technology/product (defensibility, strength), market (size, growth, timing), business model (unit economics, scalability), and traction (customer, revenue, engagement).