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Due diligence can be a legal obligation, but the term more commonly applies to voluntary investigations. It may also offer a defence against legal action. A common example of due diligence is the process through which a potential acquirer evaluates a target company or its assets in advance of a merger or acquisition. [1]
Due diligence is the amount of diligence required to avoid negligence in professional activities. It commonly arises in major acquisitions where the legal principle of caveat emptor ("let the buyer beware") requires the purchaser to make diligent inquiries about the property or service being sold.
allowing parties to sketch out fundamental terms quickly before expending substantial resources on negotiating definitive agreements, finalizing due diligence, pursuing third-party approvals and other matters [1] to declare officially that the parties are currently negotiating, as in a merger or joint venture proposal
The holder on due course rule allows banks to take an "empty head and pure heart" approach to buying loans, and to close their eyes to anything beyond the face of a promissory note when due diligence would reveal obvious irregularities in how that note was originated.
Enhanced due diligence [4] is required when initial identity checks have been completed and high-risk factors have been identified for an individual or a business. When these requirements have been met "enhanced" or additional due diligence above and beyond CDD is conducted which identifies the following information: [4] Source of wealth and ...
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This due diligence should investigate the other party's management team. Many mergers and acquisitions fail because of human resources and management-related issues, such as cultural clashes. These incidents occur because of different cultural values or different individual beliefs. [ 9 ]
Diligence is a behavior or work ethic with a belief that work is good in itself; also considered a virtue. Diligence may also refer to: Due diligence, a legal concept; Diligence (Scots law), a legal process in Scots law; Operational due diligence, review process for potential mergers and acquisitions