Due diligence – n : legal/finance term; the process employed by potential investors or their agents of investigating a business deal or the target of an investment or acquisition; often involves exhaustive fact checking and review of all historical and current financial and legal records. Due diligence is performed prior to closing the business transaction in question; often, the two parties to a transaction will sign a letter of intent (LOI ) or memorandum of understanding (MOU) for a deal, stipulating that a final agreement and closing of the deal is subject to the buyer’s completion of due diligence on the seller, to the buyer’s satisfaction.

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Adapted from "The CompanyCrafters Entrepreneur's Dictionary"
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