Due Diligence

Definition

Due diligence is the comprehensive investigation and analysis a buyer conducts before completing an acquisition. It covers financial, legal, operational, tax, environmental, and commercial aspects of the target company. The goal is to verify the seller's representations, identify risks, and confirm the investment thesis.

Context

Due diligence is referenced in Ep. 23 as part of the M&A process flow. Chris Reilly notes that thoroughness in diligence is a positive signal — but raising issues already disclosed in the CIM reflects poorly on the buyer. QofE reports are a key component of financial due diligence.

Related Terms

• Quality of Earnings — a core financial due diligence workstream
• Confidential Information Memorandum — the document buyers review before diligence
• Management Presentation — typically precedes due diligence
• M&A Process Dynamics