Due diligence is the careful investigation a buyer carries out before completing an acquisition or investment. It aims to confirm that the information supplied by the seller is accurate and to uncover hidden risks.

Main areas of review

  • Financial: accounts, debts, cash flow and tax position.
  • Legal: contracts, ownership of assets, licences and pending disputes.
  • Commercial: customers, competitors and market position.
  • Operational: systems, suppliers and processes.
  • People: key employees, agreements and workplace issues.

Who does the work

Specialists such as accountants, lawyers and consultants usually support the buyer’s team. Documents are often shared in a secure online data room.

What it can change

Findings can lead to a lower price, new protections in the contract, requirements to fix problems before closing, or a decision to walk away.

Good practice for sellers

Organised records and honest disclosure speed up the process and build trust.

Takeaway

Due diligence turns assumptions into evidence. In a large deal, it is one of the most important steps.