due diligence

American  

[doo dil-i-juhns, dyoo] / ˈdu ˈdɪl ɪ dʒəns, ˈdyu /

noun

Law, Business.

1. reasonable care and caution exercised by a person who is buying, selling, giving professional advice, etc., especially as required by law to protect against incurring liability.

   The court said there was due diligence on the part of the plaintiff.

2. the process of gathering or disclosing relevant and reliable information about a prospective sale, purchase, contract, etc..

   You should perform due diligence on a company before investing.

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Usage

What does due diligence mean? Due diligence most generally means reasonable care and caution or the proper actions that a situation calls for, especially those that help to avoid harm or risk.Due means “proper” or “required.” In legal contexts, diligence means “the degree of care required in a given situation.” In this way, due diligence is the level of care or caution that a specific situation calls for.Due diligence is especially used in legal and business contexts involving buying, selling, or giving professional advice. This kind of due diligence is often required by law in order to prevent liability.The phrase due diligence can also refer to the process of researching or disclosing pertinent information before entering into a contract or deal.For example, in the sale of a house, due diligence on the part of the seller involves disclosing information about the house, such as major problems and the dates when repairs were made. The buyer performs their due diligence by gathering this information and making the proper inspections of the house before the purchase.It can also be used in more general contexts, as in Don’t believe everything you read on the internet—do your due diligence and fact-check anything that sounds fishy.The phrase is often used with the verbs perform and do.Example: Be sure to do your due diligence before investing—you want to be sure where your money is going and what the terms are.

Etymology

Origin of due diligence

First recorded in 1450–1500, for the earlier sense “requisite effort”; 1785–90, for the current sense

Example Sentences

In a statement, Blue Owl said the transactions were “the result of highly sophisticated institutional investors conducting their own extensive due diligence over multiple months,” and that “each asset was sold at its individual fair market value as determined by an independent, third-party valuation agent.”

From The Wall Street Journal

He has been known to sleep at the offices of his companies and engage in “rage firings” and waived due diligence before inking his deal to buy Twitter.

From The Wall Street Journal

Sotomayor methodically picked apart Laredo officials’ actions against Villarreal, as well as the Texas law they used to pin her down for simply doing her due diligence as a journalist, confirming details about a critical news story directly with the government.

From Slate

Clients have said they would need to conduct extensive due diligence over the course of months to determine whether they would consider allowing the sale.

From The Wall Street Journal

Given his reputation for rigorous due diligence and concentrated positioning, that level of exposure reinforces the growing case that financials may be poised to lead should market conditions begin to improve.

From Barron's