Due diligence is the process of evaluating a target business to confirm the information provided by the vendor material to the value of the business you are looking to buy. Due diligence is much more than just the financial history of the business, looking at a wide range of factors that can impact the value of the business after settlement.
Due diligence is generally undertaken after you have made a conditional offer or agreed a Letter of Intent with the vendor, and should enable you to have access to all information necessary for you to determine if the business is what it is represented to be, and is worth what you are offering.
The due diligence process can take a couple of weeks to a couple of months. In most cases, time is of the essence, so you want this process to run smoothly and quickly. This stage of an acquisition is also about identifying risks, and (where appropriate) planning the mitigation of those risks. If not managed well, due diligence will fail to identify critical risks, or will drag on at a cost to both parties.
Experience in due diligence matters, and you want the right team on your side to get it right.