What is Due Diligence?

Answer:
Due Diligence refers to the research that is

conducted prior to finalizing a proposed business transaction. It involves investigating and analyzing relevant information about a deal to decide if it is a wise investment or not.

It involves verifying the soundness of a proposed investment.

Depending on the type of transaction under consideration, Due Diligence may be conducted by an organization’s lawyer, accountant, financial advisor, key personnel, or a combination of these individuals.

Due Diligence is carried out prior to merging with or acquiring another business entity. The process involves examining how the business operates, exploring its financial status, learning the details of pending and potential legislation, and verifying other material facts that could impact the investment.