phrase General Slang

Due diligence

· phrase · finance

The deep-dive investigation a buyer runs on a target before signing.

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Definitions

1

The forensic pre-deal check. Buyer's bankers, lawyers and accountants tear through the target's contracts, financials, IP, litigation, HR files, everything. Goal is no surprises after the wire goes out. Lives in a virtual data room these days.

“DD turned up a tax exposure in Brazil, repriced the deal 15%.”
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2

Retail-trader version: the homework you're supposed to do before YOLO-ing into a stock. Usually invoked sarcastically with 'DYOR' after recommending a meme stock.

“Not financial advice, do your own due diligence.”
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Due diligence In A Sentence

DD turned up a tax exposure in Brazil, repriced the deal 15%.
Not financial advice, do your own due diligence.

Origin & Usage

Term codified by the US Securities Act of 1933, which gave broker-dealers a 'due diligence' defence against liability if they'd properly investigated an issuer.

Variants DDdiligence
Tags #finance#wall-street#m&a#legal

People Also Ask

What does due diligence mean?

Due diligence is the thorough investigation a buyer carries out on a target company or asset before signing a deal.

How do you use due diligence in a sentence?

"We can't make an offer until due diligence turns up their real numbers."

Why is due diligence important?

It lets the buyer verify what they're actually purchasing and uncover risks or liabilities before committing to the deal.

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