What is Due Diligence?
Due diligence is a review or audit of a business performed before an acquisition is completed. Financial due diligence is a type of due diligence that involves reporting and verifying the financial information provided and assessing the underlying performance of the business ahead of a transaction. This works to both confirm the validity of information, as well as determining how robust financial situations might be in the future.
Earnings, assets, liabilities, cash flow, debt, sales, contract security, and financial management processes are usually considered as part of acquisition due diligence.