Due diligence is an investigation, audit, or review performed to confirm facts or details of a matter under consideration. In the financial world, due diligence requires an examination of financial records before entering into a proposed transaction with another party.

Due diligence is generally conducted by investors before any private equity investment, business sale, bank loan funding, etc. to check for regulatory and process compliance by the company in which they want to invest to avoid unwanted liability onto them. Due diligence are of 3 types namely legal due diligence, financial due diligence and business due diligence.