Due Diligence

What is Due Diligence?

 

‘Due Diligence’ refers to the fact that humans actively avoid danger by taking precautionary steps. Concerning HR and business, it refers to the precautionary steps a company takes before getting into a contract or agreement with another party.

 

Most companies undertake due diligence when they buy out a smaller company. It is done to weigh all the pros and cons of the acquisition and make sure that the deal does not prove to be a loss further down the line. It is also done before a merger between two companies.

 

The process might be conducted by either an in-house group or it can be given to a third party for a thorough investigation. On a higher level, it can be divided into Operational Due Diligence (ODD), Intellectual Capital Due Diligence (ICDD), Financial Due Diligence (FDD) and Commercial Due Diligence (CDD).

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