due diligence

noun

1

law : the care that a reasonable person exercises to avoid harm to other persons or their property

failed to exercise due diligence in trying to prevent the accident

2

business : research and analysis of a company or organization done in preparation for a business transaction (such as a corporate merger or purchase of securities)

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Doing Your Due Diligence

Due diligence has been used since at least the mid-fifteenth century in the literal sense “requisite effort.” Centuries later, the phrase developed a legal meaning, namely, “the care that a reasonable person takes to avoid harm to other persons or their property”; in this sense, it is synonymous with another legal term, ordinary care. More recently, due diligence has extended its reach into business contexts, signifying the research a company performs before engaging in a financial transaction. This meaning may also apply to individuals: people are often advised to perform their due diligence before buying a house, signing a loan, or making any important purchase.

Examples of due diligence in a Sentence

Recent Examples on the Web

Disney initially targeted 2025 to announce a successor, but pushing the date back to early 2026 will give the board more time to conduct due diligence on both internal and external candidates, said people familiar with the matter. —Kristian Burt, CNBC, 22 Oct. 2024

In Denver’s quest to find a quarterback to replace nine-time Pro Bowler Russell Wilson, the organization did its due diligence on most of the prospects in the 2024 class, especially Rattler. —Ryan McFadden, The Denver Post, 16 Oct. 2024

This prestigious position focused on profit improvement and due diligence for private equity transactions, a brand-new field for a liberal arts major. —Chris Gallagher, USA TODAY, 12 Oct. 2024

As Venus enters Sagittarius on Oct. 17, your sixth house of daily routines and due diligence takes center stage. —Valerie Mesa, People.com, 11 Oct. 2024

Word History

First Known Use

1598, in the meaning defined at sense 1

Legal Definition

due diligence

noun

1

: such diligence as a reasonable person under the same circumstances would use : use of reasonable but not necessarily exhaustive efforts

called also reasonable diligence

Note: Due diligence is used most often in connection with the performance of a professional or fiduciary duty, or with regard to proceeding with a court action. Due care is used more often in connection with general tort actions.

2

a

: the care that a prudent person might be expected to exercise in the examination and evaluation of risks affecting a business transaction

b

: the process of investigation carried on usually by a disinterested third party (as an accounting or law firm) on behalf of a party contemplating a business transaction (as a corporate acquisition or merger, loan of finances, or especially purchase of securities) for the purpose of providing information with which to evaluate the advantages and risks involved

the greatest exposure…for failure to conduct adequate due diligence arises in the context of public offerings of securities

—G. M. Lawrence

c

: the defense (as to a lawsuit) that due diligence was conducted