Marcus Cake

Wikipedia defines due diligence as:

In finance, due diligence is the process of research and analysis that takes place in advance of an acquisition, investment, business partnership or bank loan in order to determine the value of the subject of the due diligence or whether there are any “’skeletons in the closet’”.

The potential investor generally uses in-house resources or hires a consulting firm that specializes in due diligence and corporate investigations to investigate the background and principals of the target company. Professional reports from accountants and solicitors will also frequently be included.

Due diligence can also refer to the ongoing activities of pension or investment fund managers in keeping track of the operations, solvency, and trustworthiness of the managers of a corporation in which their fund is invested, or those of the managers of an acquiring corporation toward a target corporation.

A brief overview of the type of information required by a due diligence process can be downloaded here (word document). The document lists the necessary information in escalating stages of due diligence. I would encourage anyone going through a due diligence process to get the third party to qualify their interest in an opportunity as quickly as possible. This should be done by sending them a quality set of initial information. The due diligence process could easier if the business stored key business information in a single online platform. Please review the Online business and accounting system and the Templates Category for more information.