Due Diligence

Due diligence is a term used for a number of concepts involving either the performance of an investigation of a business or person, or the performance of an act with a certain standard of care. It can be a legal obligation, but the term will more commonly apply to voluntary investigations. A common example of due diligence in various industries is the process through which a potential acquirer evaluates a target company or its assets for acquisition

In business transactions, the due diligence process varies for different types of companies. The relevant areas of concern may include the financial, legal, labor, tax, environment and market/commercial situation of the company. Other areas include intellectual property, real and personal property, insurance and liability coverage, debt instrument review, employee benefits and labor matters, immigration, and international transactions

Consider the somewhat related business terms of malfeasance and nonfeasance. The American Heritage Dictionary defines these terms as such: malfeasance is misconduct or wrongdoing esp. by a public official. Nonfeasance as failure to perform an official duty or legal requirement. Furthermore the term misfeasance means to perform a duty or responsibility inadequately or poorly.