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Due Diligence

(If you are in need of assistance with a Declaration of Due Diligence in a service of process case, please consult our Service of Process page.)

Due diligence is a type of business investigation generally undertaken when a merger or acquisition is being contemplated. Originally termed reasonable investigation in the Securities Act of 1933, the idea of due diligence expanded from the information that brokers and sellers of securities needed to release to their clients into the systematic investigation of any business entity.

In concept, the due diligence investigation is rooted in the concept of caveat emptor – let the buyer beware. Due diligence is, in fact, simply putting caveat emptor into corporate practice, as a company contemplating an acquisition (or other contractual relationship) orders an in-depth investigation of the company they are considering acquiring.

There are also occasions on which a company will perform due diligence on itself, in what is known as reverse due diligence. Most frequently, the goal of such a process is to demonstrate the company’s attractiveness for potential buyers. Another reason for a reverse due diligence would be to demonstrate the company’s solidity and attractiveness as a purchaser.

Due diligence investigations can vary in their degrees of comprehensiveness. A large part of most due diligence investigations is a series of audits (including compatibility, financial, marketing and information systems), although a sound and thorough investigation of a company should not be limited to what appears on their books.

Nationwide Legal Investigations has regularly worked alongside auditors in the performance of due diligence, on behalf of large and medium-sized companies contemplating a merger or an acquisition. The variety and flexibility of our investigative services makes us an ideal choice for an undertaking as catholic as a corporate due diligence. With our clients in mind, we have even expanded on the concept of reasonable investigation, suggesting avenues of inquiry that greatly impacted the subsequent corporate transaction.

An auditor’s due diligence is limited to spreadsheets and ledgers. The private investigator is necessary to a due diligence because the target company’s actions and policies should come under the same scrutiny as its accounts. Important questions that can’t be answered in accounting terms often need to be asked: a green company would want to know about the environmental policies of a possible acquisition, another company might want to know whether a possible acquisition has a trading history with questionable foreign countries, a third might want to know the condition of the potential acquisition’s employees and company morale, a fourth would need to know about the potential target’s ethical acquisition of primary materials, and a fifth would want a close assessment of the potential acquisition’s history of insurance claims.

If you are a company of any size in need of a due diligence (or reverse due diligence) investigation, please contact our corporate division at (877) 493-3463 for a free consultation and quote. Alternatively, you may contact us by email, using the convenient form below.

Due Diligence – Free Consultation
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