Due Diligence - DD

Filed Under »
Dictionary Says

Definition of 'Due Diligence - DD'

1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to a sale.

2. Generally, due diligence refers to the care a reasonable person should take before entering into an agreement or a transaction with another party.
Investopedia Says

Investopedia explains 'Due Diligence - DD'

1. Offers to purchase an asset are usually dependent on the results of due diligence analysis. This includes reviewing all financial records plus anything else deemed material to the sale. Sellers could also perform a due diligence analysis on the buyer. Items that may be considered are the buyer's ability to purchase, as well as other items that would affect the purchased entity or the seller after the sale has been completed.

2. Due diligence is a way of preventing unnecessary harm to either party involved in a transaction.

Related Definitions

  •

    Audit

    1. An unbiased examination and evaluation of the financial statements of an organization. It can be done internally (by employees of the organization) or externally (by an outside firm). ...
    Read More »

  • Know Your Client - KYC

    A standard form in the investment industry that ensures investment advisors know detailed information about their clients' risk tolerance, investment knowledge and financial position.
    Read More »

  • Andersen Effect

    A reference to auditors performing more careful due diligence when auditing companies in order to prevent accounting errors. This extra level of accounting scrutiny often leads to ...
    Read More »

    • Due Diligence Meeting

      The process of careful investigation by an underwriter to ensure that all material information pertinent to a security issue has been disclosed to prospective investors.
      Read More »

    • Vetting

      A thorough and diligent review of a prospective person or project prior to a hiring or investment decision. Vetting most often refers to an individual or group, such as how a board of ...
      Read More »

    • Offering Memorandum

      A legal document stating the objectives, risks and terms of investment involved with a private placement. This includes items such as the financial statements, management biographies, ...
      Read More »

    • Audit Risk

      The risk that an auditor will not discover errors or intentional miscalculations (i.e. fraud) while reviewing a company's or individual’s financial statements. There are two general ...
      Read More »

Articles Of Interest

Sponsored links
Hot Definitions
Partner Links
Suggested Definitions