Due diligence" is an analysis and risk assessment of an impending business transaction. It is the careful and methodological investigation of a business or persons, or the performance of an act with a certain standard of

The statement is absolutely correct. Due diligence refers to investigation into the affairs of an entity prior to its acquisition, restructuring, fund raising or other similar transaction. Due Diligence is not restricted to check the facts but also to evaluate, interpret and communicate the facts so as to ensure that prospective investors make an informed investment decision. It is process of gathering information about the target company, its business and the environment in which it operates. Transactions that require proper Due Diligence: Joint Enterprise Collaborations; Partnerships; Mergers and Acquisitions; Strategic Alliance; Business Coalition; Outsourcing Agreement; Technology or Product Licensing; Joint venture through Technical or Financial Collaboration; Venture Capital Investment; Public Issue etc. Advantages of Due Diligence: It analyses who administers, owns and run the organisation. It examines the company and the market in a contrast way to assess the volatility of the market. It researches about the competitors of the target company existing in the market. It reviews the financial statements of the company such calculating debt equity ratio, etc. It examines the rise or fall in revenue/profits of the company. It expects the growth of the company with maximization of the profits of the organization.