Due Diligence Definition

Short Definition
Due diligence is a process that closely examines a business to determine its true value and factors that could contribute to future success or problems.

Extended Definition
When a small business undergoes due diligence, it is usually because of an impending sale of the business or in order to qualify for a loan or other funding. Starting with the owner, the examiner will look at every aspect of the business including employees (e.g., hiring and firing practices), assets, risks, liabilities, cash flow, and equity.

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Due Diligence and Small Business