Due diligence refers to the investigation of a company or other corporate entity before to entering into a transaction, such as a merger or acquisition, or making an investment. The objective of due diligence is to uncover any potential risks or liabilities involved with the transaction or investment, as well as to evaluate the company's overall financial and operational health.

Typically, the process of due diligence entails a comprehensive investigation of the company's financial accounts, tax returns, legal documents, intellectual property, and other pertinent information. Interviews with important employees, site visits, and other forms of investigation may also be included.
The extent and complexity of due diligence will vary depending on the nature of the transaction or investment and the parties involved. For instance, due diligence for the acquisition of a small business may be less comprehensive than that of a multinational organisation.

It is impossible to exaggerate the significance of due diligence, as it helps to discover potential legal or financial risks associated with a transaction or investment that could have severe long-term effects. Thus, it is suggested that organisations and investors wishing to participate into a transaction or make an investment consult with legal and financial experts to ensure that due diligence is completed properly and effectively.