Due diligence is used to investigate and evaluate a business opportunity. The term due diligence describes a general duty to exercise care in any transaction. As such, it spans investigation into all relevant aspects of the past, present, and predictable future of the business of a target company. Due Diligence programs were developed with the goal of improving decision making through providing a structured, systematic, and science-based program of planning, identifying, prioritizing, collecting and analyzing appropriate, relevant, necessary data; providing a consistent, more efficient, and methodical approach supporting fundamental decision management.
Due diligence is a program of critical analysis that companies undertake prior to making business decisions in such areas as corporate mergers/acquisitions or major product purchases/sales. The due diligence process, whether outsourced or executed in-house, is in essence an attempt to provide business owners and managers with reliable and complete background information on proposed business deals, whether the deal in question is a proposed acquisition of another company or a partnership with an international distributor, so that they can make informed decisions about whether to go forward with the business action.
The adoption of formal Due Diligence programs should be a strategic initiative by the decision-makers of all organizations, for the first time, using formal structures for the decision management process. Once implemented within an organization, Due Diligence Standards are an integral, ever-present facet of the organization’s strategy, assisting management through every decision; creating significant improvement in the organization’s capabilities, risk reduction, agility, morale, profitability and success.
The Due Diligence Programs benefit all who rely on due diligence services, such as Board Directors, senior management, attorneys, accountants, government regulators, etc. It also benefit all who are actively performing due diligence engagements. If you incorporate due diligence programs into your decision-making and due diligence, your organization, both large and small enterprises, will benefit through improved performance, more reliable results, and increased profitability.
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