Due diligence refers to the investigation and analysis a business or individual conducts before entering into any kind of transaction, for example, investing in an investment. This type of investigation is typically required by law for companies looking to purchase other assets or businesses as well as for brokers who wish to ensure that their client is fully informed of the specifics of a deal before agreeing to it.

Due diligence is the process that investors usually follow when considering investments which could be a corporate acquisition such as a merger, divestiture or merger. The process can uncover hidden liabilities, such as legal disputes or outstanding debts that will be disclosed only after the fact, and could affect the decision to close the deal.

There are many types of due virtual boardroom diligence, such as commercial, financial and tax due diligence. Commercial due diligence focuses on a company’s supply chain as well as its market analysis and its growth prospects. A financial due diligence analysis examines a company’s financial books to make sure that there are no accounting irregularities and that the company is on sound financial footing. Tax due diligence analyzes the tax exposure of a company and uncovers any tax owed.

Due diligence can be restricted to a period of time that is also known as due diligence during which buyers might evaluate a possible purchase and ask questions. Based on the type of deal, a buyer might need assistance from a specialist to conduct the research. A due diligence on environmental concerns could include a list of permits for environmental protection and licenses held by a business, while due diligence on financial issues might involve an audit by certified public accounting firms.