Due Diligence

Last Updated: Jun 7, 2019

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Reasonable steps taken by a company in order to satisfy a legal requirement, especially in buying or selling something.

A comprehensive appraisal of a business undertaken by a prospective buyer, especially to establish its assets and liabilities and evaluate its commercial potential.
The term is also used to describe the steps taken by a lender prior to closing a loan
to determine if the prospective meets the criteria established by the lender to qualify for the proposed loan. Due diligence, in regards to a loan would include collateral appraisals, collateral performance reviews, financial statement analysis, ownership and/or principle officer background checks, and any other steps deemed by the lender as necessary.