Due Diligence for Exit Support
In Mumbai
Vendor due diligence, a sequenced remediation list, a defensible seller earnings bridge, a data room built around buyer questions, and a disclosure position drafted from the findings rather than assembled at the end.
Overview
What Is Sell-Side Due Diligence?
Every seller believes their business will diligence well. Most are wrong, not because anything is hidden but because businesses accumulate small irregularities that nobody has had a reason to fix. A provident fund payment made late three years ago. Input tax credit that never reconciled. A director loan that was never documented. An option granted to someone who should not have received one. Individually trivial; collectively, a list a buyer will use.
Sell-side diligence exists to find that list first. The seller then has a choice a buyer will never give them: fix it, disclose it, or price it in. All three are better outcomes than having a buyer produce the same list two weeks before signing, when the only available response is to accept a reduction.
Sell-side or vendor due diligence is an independent examination of a company commissioned by its own shareholders before a sale, refinancing or fundraise. It has two outputs: a remediation list for the seller, and a report that can be shared with prospective buyers.
The exercise differs from buy-side work in purpose rather than method. A buyer is deciding whether and at what price to proceed. A seller is deciding what to repair, what to disclose and how to present the business. That difference changes what the work produces: a remediation list, sequenced by how long each item takes to fix and how much it would cost if found; a defensible normalised earnings figure, prepared by the seller rather than constructed by the buyer; a data room organised around the questions buyers will actually ask; a draft disclosure position, so warranty exposure is managed deliberately rather than reactively; and a vendor report that can be shared with multiple bidders on consistent terms.
N D Savla & Associates prepares businesses for sale and runs vendor due diligence for founders, promoters and financial sponsors across Mumbai and Maharashtra. We approach the company exactly as we would when acting for a buyer in investor due diligence, which is the only way to produce a report that will survive a bidder’s own review.
Who It Is For
Who Needs Sell-Side Diligence Support?
Four situations, with different amounts of time available.
Founders and Promoters Selling a Business
First-time sellers face the widest gap between how they understand their business and how a buyer will read the accounts. Owner-related expenses, informal family arrangements and undocumented related-party dealings are normal in an owner-managed company and look like findings in a data room. Separating these before the process begins is most of the work.
Financial Sponsors Exiting a Portfolio Company
A fund exiting a holding is selling into a process where multiple bidders will run confirmatory diligence simultaneously. A vendor report is close to essential here, both to keep information consistent across bidders and to avoid exhausting the portfolio company’s finance team. This sits alongside transaction advisory for exit on process design.
Companies Raising a Late-Stage Round
A growth round is a partial exit for existing shareholders and a full diligence exercise for the company. The same preparation applies, with additional attention to the cap table, prior round documentation and the option pool, since these are examined more closely by a new institutional investor than by a trade buyer.
Companies Preparing to List
A listing is the most demanding form of scrutiny a company will face, and preparation overlaps substantially with sell-side diligence. Historical non-compliance that a private buyer might accept with an indemnity has to be genuinely cured before an offer document. Our IPO readiness assessment addresses this on a longer runway.
Context
How Did Sell-Side Preparation Become Standard?
Vendor due diligence arrived in India late and for a specific reason: sale processes became competitive.
Bilateral sales, no process
Business ownership transferred rarely, usually within families or between known parties, and typically without a competitive process. Where there was no auction and no institutional buyer, there was no reason for a seller to prepare a report, and no market convention that they should.
Buyers set the terms
As foreign strategic buyers and early private equity entered, diligence became standard but remained entirely buy-side. Indian sellers experienced it as an intrusive process they responded to, and price reductions late in negotiations were common precisely because sellers had not anticipated what would be found.
Competitive processes change the balance
As the private equity market deepened, sale processes became genuinely competitive, with several bidders running parallel diligence on the same target. Sellers and their bankers adopted vendor due diligence, familiar from European practice, to keep processes manageable and to hold pricing tension. The improvement in accessible public records over the same period also made it easier for a seller to anticipate what a buyer would find.
Preparation becomes compliance-led
The introduction of GST created reconcilable transaction-level data, the insolvency framework made buyers far more attentive to undisclosed liabilities, and tightening of statutory dues enforcement raised the cost of historical non-compliance. The consequence is that sell-side preparation is now substantially a remediation exercise: filing, reconciling and regularising, rather than only presenting.
Prepared and unprepared sellers get different deals
A prepared seller and an unprepared one now receive materially different outcomes on the same business, and the difference shows up less in headline price than in the deferred consideration, the escrow, the indemnity cap and the time to signing.
Our Process
What Is the Step-by-Step Sell-Side Preparation Process?
The sequence is designed so that remediation happens while there is still time for it to be effective.
Run the Diligence as a Buyer Would
Build the Remediation List and Sequence It
Longest-lead items first
Remediate What Can Be Cured
Build the Seller’s Earnings Bridge
Prepare the Working Capital Position
Organise the Data Room Around Buyer Questions
Draft the Disclosure Position
Where preparation becomes protection
Issue the Vendor Report and Manage Confirmatory Work
Step seven is where sell-side diligence converts into protection. Warranty exposure is determined by what was disclosed, so the disclosure letter has to be built from the diligence findings rather than drafted separately at the end. We carry this through with our exit transaction agreements work.
Remediation
What Sellers Should Fix Before a Process Starts
Each item below is visible to a buyer and each has a predictable consequence if it is still open when the data room opens.
| Issue | Why It Matters at Exit |
|---|---|
| Overdue statutory filings | Visible on public record; suggests wider control weakness |
| Provident fund and statutory dues arrears | Quantifiable liability with interest and penalty; usually a direct price deduction |
| Unreconciled GST input credit | Treated as a certain exposure and deducted, not indemnified |
| Undocumented related-party transactions | Both a tax exposure and an earnings quality adjustment |
| Option pool not reconciled to cap table | Creates uncertainty over fully diluted price per share |
| Owner expenses run through the business | Reduces reported EBITDA unless evidenced as non-recurring |
| Charges not satisfied on the register | Delays completion; becomes a condition precedent |
Do not remediate by restating prior year accounts without advice. Correcting a historical position can create its own tax and filing consequences, and a restatement discovered in diligence raises more questions than the original error. Sequence remediation so that each fix is defensible on its own.
By Seller
How Does Exit Preparation Differ by Seller?
What needs fixing depends on how the business has been run.
Owner-Managed and Family Businesses
The dominant issue is the separation of personal and business affairs: property held personally and used by the business, family members on payroll, informal loans in both directions. None of these are improper, but all of them require documentation and an earnings adjustment before a buyer values the business.
Sponsor-Owned Portfolio Companies
These are usually well-governed but carry legacy issues from the sponsor’s own entry, including prior round documentation, ratchet and anti-dilution mechanics, and accrued preference entitlements. The cap table and waterfall need to be modelled precisely, because the price per share to each seller depends on it.
Companies With Substantial Employee Shareholding
Where an option pool is significant, the fully diluted position, the treatment of unvested options on a change of control, and the tax consequence for employees all have to be settled before the process. Buyers price uncertainty here aggressively. This should be run together with valuation so the per-share outcome is understood by everyone before terms are agreed.
Businesses With Concentrated Customer Relationships
Where a small number of customers drive most revenue, contract terms, change-of-control clauses and renewal history become the centre of diligence. Preparation means having the contracts, the renewal record and the relationship history assembled and, where possible, consents anticipated.
Timeline
How Long Does Exit Preparation Take?
The honest answer depends almost entirely on the state of the compliance record, and sellers consistently underestimate it.
Where Records Are Clean: Six to Ten Weeks
A company with current filings, no statutory arrears and a documented cap table needs only the analytical work: the earnings bridge, the working capital analysis, the data room and the disclosure position. This is a defined project with a predictable timeline.
Where Filings Are Overdue: Three to Six Months
Outstanding annual filings and returns have to be brought current before a data room opens, and the additional fees and penalties have to be paid. This is sequential work that cannot be compressed by adding people, which is why it belongs at the front of the timetable rather than in parallel with the process.
Where Statutory Dues Are in Arrears: Longer Still
Provident fund, professional tax and similar arrears accrue interest and penalty and often require assessment or settlement with the relevant authority. These are the items most likely to become a direct price deduction, and also the ones that take longest to resolve, so identifying them early is worth more than any other part of the exercise.
Where the Cap Table Is Unresolved
Historical share transfers without proper documentation, options granted outside the scheme, or prior round terms that were never reflected in the articles all take time to regularise, and each requires the consent of people whose interests may have changed. This work should begin before a buyer is in sight, because it becomes considerably harder once shareholders know a sale is coming.
Why Us
Why Choose N D Savla & Associates for Exit Support?
The value here is entirely in what gets fixed, and fixing requires lead time.
Because we also act for buyers, we know which findings actually move price and which are noise. That distinction determines what belongs on the remediation list and what does not, and it prevents sellers spending months on items no buyer would price.
Filing overdue returns, regularising statutory dues, documenting related-party arrangements and reconciling registers is work we do rather than recommend. A remediation list handed to a finance team already running a sale process usually does not get completed.
We build the normalised earnings bridge with evidence behind every adjustment, and prepare certified financial statements where the process requires them. A seller who presents the number negotiates from a different position than one who responds to it.
The disclosure letter is drafted from the diligence output rather than assembled at the end from memory. This is what converts preparation into reduced warranty exposure after completion.
Filings, charges and registers are brought current on the Ministry of Corporate Affairs record before a data room opens, because that record is the first thing a bidder checks. Our offices at Andheri East, Charni Road, Vashi, Thane, New Panvel and Panaji support sellers across the region.
Filings, charges and registers are brought current against the public record published by the Ministry of Corporate Affairs at mca.gov.in, because that record is the first thing a bidder checks.
Frequently Asked Questions
Frequently Asked Questions on Exit Due Diligence
What is vendor due diligence?
When should sell-side preparation start?
How does sell-side diligence affect the price?
Does a vendor due diligence report protect the seller from warranty claims?
Can the same report be used with multiple bidders?
Preparing to Sell?
Find your own issues before a buyer does. Speak to our Mumbai team early.
Speak to N D Savla & Associates10:00 AM – 7:00 PM