What Exactly is Due Diligence?

in Company
Its most frequently heard version is the one pertaining to business, where "due diligence" refers to the steps taken by venture capitalists before investing a round of capital in a startup, the ongoing investigation as to how the funds are being distributed, or the precautionary steps taken by a larger company in deciding to acquire a smaller company.
Sometimes the phrase is referred to as a capitalized proper noun: Due Diligence. The precise definition of "due diligence" varies between firms and organizations. In manufacturing for example, certain environmental requirements must be met, which are verified in an Environmental site assessment called a "due diligence report". It consists of a checklist of specifications and sections for open commentary.
In venture capitalism, due diligence involves looking into the past and present of the people and structure of a company requesting venture funding. For instance, venture capitalists are wary of investing in companies that lack people with credentials or a proven track record. Depending on the overall level of caution in the investment environment at the time, a duediligence investigation may be more or less stringent. Typically a venture capital firm will have a dozen or more investigators whose task is to research specific details of the personal history of people in the company. With the Internet, researching a person's past associations and experience has never been easier, much to the delight of investment communities.
Of course, due diligence is not a panacea against investment failures. Even a company made up of well-educated high achievers can falter due to unpredictable market conditions, unforeseen competition, or technical setbacks. Due diligence generally refers to the background checks conducted after a venture partner has already made a decision about the company. Typically, partners will prefer to invest in companies led by people they already know are very trustworthy, and probably have been given funds in the past.
In law, due diligence refers to precautions that are supposed to be taken by a person or company in some context. For example, did the company thoroughly check their product beforehand to ensure it was non-toxic or was not a strangulation hazard? If they do not, and bad results come of their negligence, they can be held criminally liable.
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Ryan Strange has 1 articles online and 1 fans
Without doubt the success of an acquisition to an acquirer - be it a corporate or financial investor - can be significantly influenced by the extent and quality of due diligence undertaken. Financial due diligence is a key aspect of the overall investigation into the target. 
Baker Tilly’s financial due diligence specialists are extremely experienced in providing these services to businesses.
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What Exactly is Due Diligence?

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What Exactly is Due Diligence?

This article was published on 2011/06/15