Due diligence
The review a buyer or investor makes of a company's records before a deal is signed.
What it means
Due diligence is a buy-side review that goes beyond the seller's sales materials. Teams test earnings quality, legal standing, growth assumptions and day-to-day operations. Findings shape the price and the terms of the deal, and they can stop a deal altogether.
The work is document heavy. A typical review covers filings, audited statements, customer and vendor contracts, equity records, litigation files and compliance records, often stored in a virtual data room. Deep research tools can scan those files quickly, but each finding still needs a check against the original document. Public company filings are a common starting point, and they are free to search on the SEC's EDGAR system. Teams usually summarize their findings in a memo for the decision makers, and every figure in that memo should trace back to a document in the file.
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https://bestaifordeepresearch.com/glossary/due-diligence/