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

It requires real due diligence: understanding the investment strategy; the structure of the vehicle; the exit mechanics; the valuation policies; and the total cost of ownership.

From MarketWatch

She said the board is open to further engagement, including providing some due diligence information, if Steel Dynamics and SGH address several issues “including, importantly, increasing the value of your proposal for all BlueScope shareholders.”

From The Wall Street Journal

If the court approves the sale, it would take several months to complete due diligence and secure city construction approvals, he said.

From Los Angeles Times

Darren Jones, chief secretary to the prime minister, told MPs on Monday that records detailing follow-up questions posed by No 10 during the initial due diligence process for the appointment would not feature in the first tranche of published material, due to the "interest in this document" from the Met Police.

From BBC

“Decisions that affect students and families must be grounded in evidence and due diligence,” the assistant superintendent wrote on Facebook.

From The Wall Street Journal