phrase
General Slang
Due diligence
· phrase · finance
The deep-dive investigation a buyer runs on a target before signing.
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Definitions
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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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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.
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