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Contract & Commercial Law vocabulary · Mergers & Acquisitions

Due diligence

Meaning in contract & commercial law, with examples

/ˌdjuː ˈdɪlɪdʒəns/nounCore term

In contract & commercial law, due diligence means: A detailed investigation of a company's legal, financial and commercial position, carried out before buying it, investing in it or signing a major contract with it.

In Turkish: hukuki inceleme, durum tespiti, detaylı inceleme

How it is used

A standard phase of every acquisition. Lawyers review documents in a 'data room', send questionnaires and prepare a due diligence report that highlights risks ('red flags'). You carry out, conduct or complete due diligence; it is often shortened to DD.

Example sentences

  1. Our due diligence found three unpaid tax assessments.

  2. The buyer needs six weeks to complete due diligence.

Common collocations

  • carry out due diligence
  • legal due diligence
  • due diligence report
  • financial due diligence
  • data room
  • acquisitionThe purchase of a company, part of a company or a business, usually by buying its shares or its assets.
  • target companyThe company that a buyer plans to acquire or invest in during a merger, acquisition or takeover.
  • representationA statement of fact made by one party, before or when the contract is signed, that encourages the other party to enter into it.
  • share purchase agreementThe main contract in a company acquisition, under which the seller transfers shares in the target company to the buyer for an agreed price.

This word in other fields

The same English word can have a different meaning in another field:

More terms: Mergers & Acquisitions

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This page explains English vocabulary for learners. It is not legal advice.