Due diligence (DD) is the investigation, audit, or review performed to confirm facts or details of a matter under consideration. It is a process that involves risk and compliance check, conducting an investigation, review, or audit to verify facts and information about a particular subject. Due diligence can be a legal obligation, but it will more commonly apply to voluntary investigations. It is a way to reduce exposure to risk and ensures that a party is aware of all the details of a transaction before they agree to it.
Due diligence is primarily carried out by equity research firms, fund managers, individual investors, risk and compliance analysts, firms, and broker-dealers. It can be difficult to understand what due diligence really is and how best to incorporate it into procedures, depending on the context in which the term is used, it can hold other meanings.
Due diligence is frequently used in business to investigate and verify information about a company or investment opportunity. Due diligence meaning in law is the process by which a company is obligated to conduct an audit of any future transactions or investments they express a wish to make, and the companies with which they hope to do business are legally obligated to give them all the information needed to do so.