What is Due diligence?

Whether you're a beginner or an expert, you will find this Glossary useful.

Due diligence refers to the process of investigating and assessing a person, business or details of an investment to assess suitability, risk, potential value and reward before formally entering into a business contract.

what-is-due-diligence

Due diligence definition

Due diligence refers to the process of investigating and assessing a person, business or details of an investment to assess suitability, risk, potential value and reward before formally entering into a business contract.

Due diligence is generally used during mergers between two similar companies or when larger companies acquisite smaller ones.

Due diligence process

Due diligence process can be conducted by a neutral unbiased trusted third-party like a professional services firm. It enables all the stakeholders involved in the transaction to have the required information to assess the risk involved accurately.

During investigative period of the process company's financial records, past credit worthiness and anything else relevant to the transaction may be inspected. The final decision of formalizing the contract largely depends on the outcome of the process.


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