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).