Due diligence is an investigation or audit of a potential investment to confirm all facts

Due diligence

As reviewing all financial records, plus anything else deemed material. Due diligence refers to the care a reasonable person should take before entering into an agreement or a financial transaction with another party. 

When sellers perform a due diligence analysis on buyers, items that may be considered are the buyer’s ability to purchase, as well as other elements that would affect the acquired entity.

The due diligence process (framework) can be divided into nine distinct areas: