The short answer
A seller can wait for the buyer's review or get ahead of it. Three levels are available: a numbers appendix you produce yourself, a financial factbook, or a full vendor due diligence. They differ not only in price but in what they achieve legally and in the negotiation.
The rule of thumb: the more bidders in the process and the more the numbers need explaining, the sooner the higher level pays off. With a single interested party and a clear set of figures, a full vendor due diligence is usually too expensive.
The three levels
| Numbers appendix | Financial factbook | Vendor due diligence | |
|---|---|---|---|
| Who prepares it | your own finance team | transaction advisory, engaged by the seller | audit or transaction services firm |
| Content | analyses and explanations | structured analysis, no opinion | full analysis with a report |
| Liability towards the buyer | none | none | possible, by extending the report |
| Lead time | weeks | several weeks | several months |
| Effect on the process | limited | the same basis for every bidder | partly replaces the buyer's review |
What a vendor due diligence delivers
A vendor due diligence is a review commissioned by the seller that meets the same standard as the buyer's. Its decisive feature is the reliance extension: the buyer, and often the buyer's lenders, receive a reliance letter and can rely on the report. That creates a basis for a claim against the preparer – and makes the report usable for the buyer.
The effect on the process is considerable. Every bidder works from the same material, the time to binding offers falls, and the discussion about adjustments starts from the seller's own derivation. In auctions with several financial investors a vendor due diligence is therefore largely standard – not least because it stops five bidders putting the same questions to the same finance team in parallel.
What it does not do: it rarely makes the buyer's review superfluous. The norm is a shortened review that builds on the VDD report and goes deeper on selected areas.
What a financial factbook delivers
The factbook is the middle level. It contains the same analyses – historical profit and loss, balance sheet and cash flow, an adjusted earnings statement with a bridge to reported earnings, revenue analyses by customer, product and cohort, the derivation of net debt and working capital per month end, headcount and capital expenditure data, and a plan-versus-actual bridge. What it does not contain is an opinion, and it is normally not extended to the buyer.
In practice that is often enough. Most of the value comes not from the liability but from the structure: questions in the data room drop noticeably, the finance team is relieved, and the numbers arrive in the order a buyer reviews them.
When each level pays off
- Numbers appendix: one interested party, clear figures, no group structure, no carve-out. Preparation stays in-house.
- Financial factbook: a structured process with several parties, manageable complexity, but a development that needs explaining – after a business model change or a period of strong growth, for instance.
- Vendor due diligence: an auction with several financial investors, a group or consolidation structure, a carve-out, several countries, or a timetable that does not allow parallel reviews by several bidders.
An intermediate form is common: the factbook is prepared, and only once it becomes clear that several bidders will stay in the race is it built out into a full vendor due diligence. That presupposes it was laid out from the start at the depth a review demands.
What it actually costs the company
Fees are rarely the largest item. The expensive part is the time of your own people: every analysis has to be traceable back to the books, variances have to be explained, and data cuts are redrawn several times. At the peak, a substantial share of the finance team's capacity goes into it – alongside the running monthly close.
That is precisely why the role is often reinforced externally in this phase. An interim CFO or a project team takes the transaction side while the existing team keeps the business running. In one mandate at a company with more than 500 employees, nugrow prepared a financial factbook together with a large audit firm and introduced consolidation across nine entities in parallel; the detail is in the interim CFO references.
Three mistakes
Starting too late. A factbook built on figures that are not yet reconciled produces correction loops. The sensible start is as soon as the accounts are reliable – not once the process is already running.
Adjustments without evidence. A factbook whose earnings bridge the buyer strikes in half works against the seller. Every line needs support before it goes into the report.
The report contradicts the data room. Where the numbers in the factbook and the documents in the data room do not match, the damage to confidence outweighs the benefit of the whole exercise.
Frequently asked questions
What is the difference between a vendor due diligence and a financial factbook?
Both are commissioned by the seller and contain similar analyses. A vendor due diligence ends in a report that can be extended to the buyer and the buyer's lenders, creating a basis for a claim. A factbook contains no opinion and is normally not extended.
Does a vendor due diligence replace the buyer's review?
Usually not entirely. The norm is a shortened buyer review that builds on the VDD report and goes deeper on selected areas. Full reliance is rare, because the buyer's lenders want a basis of their own.
How long does preparation take?
A financial factbook takes several weeks in practice, a full vendor due diligence several months. The time depends less on the preparer than on how quickly the finance team can derive the analyses from the books.
Is it worth it for smaller companies?
With one interested party and a clear set of figures, a well-prepared numbers appendix is normally enough. As soon as several bidders review in parallel, or the development needs explaining, at least a factbook pays off – mainly through the relief it gives your own people.
Who should prepare the factbook?
The analyses have to come out of your own books; the structure and the argument from someone who knows the review from the other side. In practice it is a combination: the finance team supplies the data, a transaction advisor or an experienced interim CFO builds the presentation.
What happens to the report if the sale falls through?
It stays with the seller and has a limited shelf life: after twelve months the figures are stale and the analyses have to be rolled forward. The groundwork – earnings bridge, net debt schedule, working capital series – remains usable.
Read on
- Financial due diligence – the six review areas on the buyer's side.
- Purchase price mechanics – how enterprise value becomes the amount in the account.
- Exit readiness – twelve months of lead time, step by step.
- The data room – structure, contents and checklist.
- Finance for private equity portfolio companies – from closing to exit preparation.
Sources and status
Based on the preparation formats customary in German and European sale processes, together with nugrow's own mandate experience in exit preparation and financial factbooks. As of September 2026. This article does not replace legal or tax advice.
