Due Diligence

Reviewed by Vineeth | Updated on Aug 26, 2020

Introduction

Due diligence is an audit or investigation of a product or possible investment to make sure that all numbers mentioned are correct, which may involve reviewing of fiscal records. Due diligence often refers to the in-depth study and research being done prior to signing an agreement or a transaction with a party.

Potential investors will have due diligence done prior to purchasing a company's securities. Sometimes, due diligence also refers to an examination a seller does against a potential buyer which may include whether the buyer is with access to sufficient resources to successfully finish the transaction of purchase.

Understanding Due Diligence

Due diligence is audit or investigation being made by the potential investors on products to ensure all records provided are true. Due diligence points to the study conducted prior to entering an agreement with a party for a transaction.