Definition by the book
An investigation or audit of a potential investment to confirm all facts, such as reviewing all financial records, plus anything else deemed material. Due diligence refers to the care a reasonable person should take before entering into an agreement or a financial transaction with another party. When sellers perform a due diligence analysis on buyers, items that may be considered are the buyer’s ability to purchase, as well as other elements that would affect the acquired entity or the seller after the sale has been completed.
What it really means
Due diligence is detailed research made by the potential investor(s) or buyer to better understand a company they’d like to invest in. This in-depth analysis typically covers the technical, legal and financial grounds of a company.
Learn more
- https://medium.com/@adjblog/due-diligence-template-request-list-for-startup-fundraising-from-investors-e242f0e87e25
- https://www.investopedia.com/terms/d/duediligence.asp
- https://thepathforward.io/a-guide-to-due-diligence/