What is a Due Diligence?
"Due Diligence" describes the actual testing and evaluation of a company in business transaction by a potential investor.
A potential purchaser for a house would go to, for example, the actual respective homes, evaluate the condition (this process could be described as "technical because of diligence") then look into the land registry entry (analogous to the "Legal Due Diligence") to gather information on running costs (that would be the actual "financial due diligence") and so on.
Potential buyers examine, just like the buyer in the previous example, prior to the acquisition of a business any lawful, financial, financial, organizational and technological conditions of the target company.
Particularly with the purchase of large parts of companies or entire businesses due diligence offers played a very large part for years. The use of the right experts and the right tools, enhance such processes with regard to the security, duration and cost efficiency significantly.
A full Due Diligence can take several months to complete. As pointed out above the complete process contains at least a legal due diligence, a financial due diligence, a breakdown of the enterprise itself as well as a in depth approach to the comapnies financial records.
If you`d like to find out more regarding a verified approach to due diligences we advise you to read the great "Due-Diligence-Checklist" which can be downloaded right here.