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Due DiligenceDue diligence is the effort a party makes to avoid harm to another party. Quite often a party in a contract may be obligated to provide due diligence. An example of a "due diligence report" is a Phase I Environmental Site Assessment (ESA), which is performed to determine potential environmental conditions that may cause harm to the surrounding environment. Business In finance, for example, the term can refer to the activities of pension or investment fund managers in keeping track of the operations, solvency, and trustworthiness of the managers of a corporation in which their fund is invested, or those of the managers of an acquiring corporation toward a target corporation. A "due diligence report" is often prepared to discover all risks and implications regarding a decision to be made. Information may be gathered by the due diligence team either by external analysis and research as is typical during due diligence for venture capital funding or information may be formally laid out using a secure data room used in due diligence for mergers and acquisitions.
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