Quick Definition

Due diligence is the comprehensive assessment and evaluation of a business or individual prior to signing a contract, particularly in financial transactions.

Examples

• 1A venture capital firm conducting due diligence before investing in a startup, reviewing financial statements, market position, and management team.
• 2A homebuyer performing due diligence by inspecting the property, checking for liens, and reviewing the neighborhood crime rates.
• 3An investor reviewing the annual and quarterly financial reports of a company before purchasing its stock.
• 4A company conducting due diligence on a potential supplier by assessing their credit history, production capabilities, and compliance with industry standards.

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