Vendor Due Diligence in Kolkata

Buy-side diligence on a Kolkata deal is an interrogation of the group: the buyer's advisers start from the target and work outward, testing every cross-holding, guarantee and related-party line for a reason to pay less. A vendor programme runs the same investigation in the same direction, but on your side of the table and ahead of the clock. Instead of a buyer discovering that the business you are selling is one arm of a house built over generations in tea, jute, engineering or distribution, you present a group that has already been read, with the separation proven and the threads that tie the target to the rest of the house identified, resolved or fairly priced.

That posture changes what the work is for. Where a buyer hunts for the inter-company loan or the captive-supply arrangement to argue the number down, we hunt for the same items in order to untangle or price them before the process opens. The vendor due diligence stream sets out the sell-side method; here it is bent to the layered eastern-India group the Kolkata market actually produces, where the separation of the target from the house is the question every buyer will press hardest.

The defining sell-side task in an eastern-India house is to hand a buyer a clean separation rather than a puzzle. Inter-company loans and group guarantees have to be identified and, where they cannot travel, discharged or scheduled to be released before completion, so a buyer is not left to assume the worst about debt that is not really the target's. Cross-collateralised charges registered against group assets have to be traced and cleared from the picture. The related-party web — captive supply, shared services, use of premises, intra-group brand licences — has to be separated into what is genuinely arm's length and what flatters the margin, and the standalone earnings base rebuilt on the terms the business will carry once it leaves the house. Do this first and the buyer adopts your number; leave it and the buyer rebuilds it from the group ledger and marks it down.

Old land and legacy liabilities are the other threads a seller is better off pulling early. Title on estates, mills, godowns and industrial plots acquired long before current registration practice is a genuine exercise — mutation records lag, leaseholds are unregistered or long expired, tenancy claims sit unresolved — and it takes time to put right. So does clearing a change-of-control consent, quantifying a pension or gratuity shortfall, or providing for a dormant dispute the house has carried for decades. Some of these can be genuinely remediated before the process opens; others cannot be cured on a deal timetable but can be quantified, provided for and framed in the fact book rather than weaponised as a surprise. Sequencing what to initiate now and what to disclose and price is where the vendor exercise earns its fee.

A buyer of a family business is also underwriting whether it runs without the family selling it. In a house where a generation of relationships holds the business together, key-person dependence is the sharpest question in the room, and it is the one no financial, tax or legal specialist can answer. That leadership and organisation read is one we run in-house on a Kolkata house, tracing how much capability sits below the promoter, which individuals genuinely carry the trade and might leave, and whether the second line a buyer would depend on post-completion actually exists. Where the bench is thin, that read becomes a retention and succession answer built into the story rather than a gap a buyer prices against you.

The commercial purpose of the whole programme is tension across a field of bidders. A vendor report that several buyers can rely on lets you run a genuinely competitive, equal-access process on a layered group: every bidder works from the same fact book, confirmatory diligence shrinks, and no one buyer enjoys the edge that comes from being the sole party to have untangled the house. That is how a seller holds both price and pace and shortens time in exclusivity, where re-trades usually land. Read as one integrated diligence programme and carried into the M&A transaction advisory that runs the sale, the separation case, the earnings base and the negotiation move together rather than in separate memos.