Due diligence is an investigational process that is carried out prior to making important business decisions, such as mergers, acquisitions or investments. It involves a thorough assessment of the company's assets and liabilities and overall financial health. It also evaluates legal risks and compliance. M&A deals that fail are often due to inadequate or incorrect investigations.

There are a variety of kinds of due diligence, each with its own unique set of requirements. The main goal of due diligence is to find any problems that could jeopardize the transaction or increase the risk of a post-transaction. To achieve this, you must have a wide range of resources for conducting the investigation. This includes paid online information services, specialist databases and search engines for free.

There are two types of due diligence: hard and soft. Hard due diligence is dependent on numbers and information like audited financial reports Profit and loss statements as well as budgets, balance sheets and projections. It also includes a deep examination of a company's Going Here contracts and lease agreements, real estate specifics (deeds mortgages, use permits and title policies) as well as sales and purchase history. It is important to compare this data against similar companies in the industry to get a feel for the size of the business and its growth prospects.