Browse Definitions :
Definition

due diligence

Contributor(s): Herzl Regev

1. Due diligence is the process of systematically researching and verifying the accuracy of a statement.

The term originated in the business world, where due diligence is required to validate financial statements. The goal of the process is to ensure that all stakeholders associated with a financial endeavor have the information they need to assess risk accurately.

When due diligence involves the offering of securities for purchase, as in an IPO (initial public offering), specific corporate officers are responsible for the proper completion of the process, including the issuer, issuer's counsel, underwriters, CFO and the brokerage firm offering shares. Because of the delicate nature and importance of such judgments to the prospects for the performance of a company's equities in the public market, there is a strong emphasis on neutral, unbiased analysis of both the current financial state and future prospects of the firm in question.

2. In compliance, due diligence describes the degree of effort required by law or industry standard.

3. In real estate, due diligence is the time period between the acceptance of an offer and the close of escrow.

4. In civil law, due diligence is synonymous with "reasonable care."

5. When a patent is issued, due diligence is the requirement that the patent holder should develop a product around the patent, and not just prevent others from doing so.

Professor Patrick Reinmoeller explains the importance of due diligence and suggests a new approach:

This was last updated in February 2015

Continue Reading About due diligence

Join the conversation

2 comments

Send me notifications when other members comment.

Please create a username to comment.

I found this very succinct video on Due Diligence. Explains everything you need to know in 3minutes. http://www.corporatefinancetv.com/video/336/what-is-due-diligence.html
Cancel
Do-It-Yourself Due Diligence - Protecting the People of Small Business www.Avent-Guard.com
Cancel

-ADS BY GOOGLE

File Extensions and File Formats

Powered by:

SearchCompliance

  • risk management

    Risk management is the process of identifying, assessing and controlling threats to an organization's capital and earnings.

  • compliance as a service (CaaS)

    Compliance as a Service (CaaS) is a cloud service service level agreement (SLA) that specified how a managed service provider (...

  • data protection impact assessment (DPIA)

    A data protection impact assessment (DPIA) is a process designed to help organizations determine how data processing systems, ...

SearchSecurity

  • NIST Cybersecurity Framework

    The NIST Cybersecurity Framework (NIST CSF) is a policy framework surrounding IT infrastructure security.

  • Port Scan

    A port scan is a series of messages sent by someone attempting to break into a computer to learn which computer network services ...

  • DMZ (networking)

    In computer networks, a DMZ (demilitarized zone), also sometimes known as a perimeter network or a screened subnetwork, is a ...

SearchHealthIT

SearchDisasterRecovery

  • business continuity plan (BCP)

    A business continuity plan (BCP) is a document that consists of the critical information an organization needs to continue ...

  • disaster recovery team

    A disaster recovery team is a group of individuals focused on planning, implementing, maintaining, auditing and testing an ...

  • cloud insurance

    Cloud insurance is any type of financial or data protection obtained by a cloud service provider. 

SearchStorage

Close