Due Diligence

What is Due Diligence?

Due diligence is the process of thoroughly evaluating a company, its financials, operations, legal status, and market position before making an investment or acquisition. This process helps investors and acquirers assess risks, uncover potential issues, and confirm the accuracy of the company’s claims. Comprehensive due diligence is crucial for making informed investment decisions.

Key Areas of Due Diligence

• Financial Review: Analyzing financial statements, cash flow, and profitability.
• Legal Review: Checking for potential legal liabilities, intellectual property rights, and contracts.
• Operational Review: Evaluating the company’s business model, processes, and market position.

Related Terms and Concepts

Valuation, term sheet, investment round, merger