Due Diligence

Definition

The careful investigation into a company prior to making an investment to ensure that all facts are known.

Tips

For middle market transactions, due diligence comprises three events: 1) the holding of a data room; 2) the holding of one or more management presentations; 3) the conducting of site visits in M&A, traditional or technical due diligence focuses on financial information, taxes, legal and regulatory compliance, environmental compliance, human resources, contracts, information technology, and so on. Strategic due diligence explores whether the potential of the deal is realistic by testing the rationale.