What does due diligence mean?

Due diligence is checking up on the details of a transaction. Typically, due diligence occurs when there’s a purchase of a business. The buyer of the business is, of course, wanting to find out are the representations of the seller accurate? They’re going to want to go look through the papers. They want to make sure the financials are accurate, that they’re not being lied to or misled. They’re going to want to go and check with customers to determine if these really were the sales of the business. The due diligence period is to determine if you’re really buying what the seller is representing and whether the value the seller puts on it is really a fair value.