Due diligence is an investigation, audit, or review performed to confirm facts or details of a matter under consideration and carried out by a potential investor against a company in which he or she intends to invest. Due Diligence is considered important so that investors do not take the wrong steps when deciding to buy shares of the company in question from securities as an intermediary (broker). In the financial world, due diligence requires an examination of financial records before entering into a proposed transaction with another party.

The parties involved in due diligence include:

  • Equity analyst
  • Fund manager
  • Broker-dealer
  • Investors
Benefit of Due Diligence:
  • Identify and help reduce potential risk
  • Improve the valuation of the business
  • Help the acquirer understand the target company and its operations before executing their business.
  • Buyers can obtain information to help determine the target company's fair price
  • Due diligence can be an excellent basis for starting negotiations
  • Help identify issues that could hinder a closing/ business deal
  • Minimise the risk that can cause significant problems in the future and lead to negative values ​​after Mergers and acquisitions (M&A) deal