What Is Due Diligence?

A process of reviewing relevant information, documents and circumstances before entering into a transaction or business arrangement.

What Does Due Diligence Mean?

Due diligence is the process of investigating a company, transaction or arrangement before committing to it. It covers documents, records, contracts and other relevant information.

Why It Matters

Due diligence helps parties identify risks and confirm what they are buying into. The depth of the process depends on the nature and size of the transaction.

Related Information

Related legal terms: Term Sheet, Cap Table

Related practice area: Startup Legal Services →

Dealing With a Related Matter?

This explanation is a general starting point. If the term matters in a specific situation you are facing, a conversation about your facts can help you decide the right next step.

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This definition provides general information and does not constitute legal advice. Laws change, and their application depends on the facts of a matter. For advice on your specific situation, consult a qualified lawyer.