Due Diligence

Investigating a company before closing a deal

What it is

Due diligence is the investigation an investor or acquirer runs before closing a deal, verifying that a company is what it claims to be. It covers financials, legal structure, technology, customers, and the team. The goal is to surface risks and confirm the story before money changes hands.

Why it matters

It is where deals get validated or fall apart; surprises found in diligence can kill a term sheet or cut the price. Founders who keep clean records sail through it; messy ones lose time and leverage.

Resources

Investopedia, Due Diligence

investopedia.com

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