Due Diligence

What is due diligence?

Financial due diligence is an investigation into a company’s affairs on behalf of a potential acquirer or investor into a business.

This is an exercise undertaken to ascertain that the details provided by a vendor or investee company used to extract offers of finance or investment are largely correct and also to highlight any areas of material weakness in the company.

Who will request a due diligence report?

Whilst every purchaser of a business should look to undertake some level of financial due diligence on the target entity to give themselves a level of comfort, any large backers of a transaction are likely to insist on one.

This will include bankers and institutional investors who require a satisfactory outcome of due diligence before sanctioning a proposed lend.

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