Due Diligence is the investigation that a reasonable business or person is expected to take before entering into an agreement or contract with another party or an act with a certain standard of care. It can be an obligation, but the term will more commonly apply to voluntary investigations. A regular instance of due diligence in different industries is the process through which a prospective acquirer assesses a target company or its assets for an acquisition.
The purpose behind due diligence holds that performing this type of investigation contributes significantly to informed decision making by enhancing the amount and quality of information available to decision-makers and by ensuring that this data is systematically used to consider the decision at hand and all its costs, advantages, and risks.
