Due Diligence
Comprehensive verification of a person, company or transaction prior to a decision. Includes confirmation of stated facts, identification of risks and assessment of how the actual picture corresponds to the one presented.
Practical significance
In practice, Due Diligence answers the question of what we actually know about the other party - and does so before signing, not after a conflict arises. The depth of the check is matched to the value of the decision: from a basic counterparty check to a multi-jurisdictional check of a group of companies.
Where it is used
- transactions, investments and M&A
- selection of partners and senior executives
- banking and corporate compliance
- major contracts with new counterparties
What the term does not mean
Due Diligence does not mean a guarantee of the absence of risks and is not a financial audit: the check works with legally accessible information and records both facts and gaps.
How it differs from «Background Check»
Background Check is a verification of one person's biography; Due Diligence is broader and covers a company, transaction or structure as a whole, including connections and obligations. More about this term
Illustrative example
Before purchasing a stake in a company, an investor commissions Due Diligence: owners, litigation, debts, pledges and actual business activity are checked. A discovered pledge on the stake changes the terms of the deal.
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Definition verified 2 August 2026
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