Due Diligence
Due diligence is a potential buyer’s structured review of a business before entering into an acquisition agreement.
Due diligence examines a business’s financial, tax, legal, and operating circumstances. It may cover earnings, contracts, tax positions, market position, processes, and IT, with additional areas depending on the business.
The review often follows a letter of intent. Its scope and duration depend on the company, the proposed transaction, and the quality of the available records. Careful preparation makes the review easier. A seller can also commission a review in advance, commonly called vendor due diligence.
Due diligence is a potential buyer’s structured review of a business before entering into an acquisition agreement.