In business terms, due diligence is the research and analysis of a company or organization done in preparation for a business transaction, such as a potential acquirer evaluates a target company and its assets.
The whole diligence process has completely shifted due to technology advances, and for the better.
The term “due diligence” has been used since at least the mid-fifteenth century, and it meant “requisite effort.”
However, centuries later, a more legal meaning was associated with term; the care that a reasonable persons takes to avoid harm to other persons or their property.
If that sounds familiar, that’s because it is synonymous with “ordinary care.” It hasn’t been until recent years that due diligence has become common jargon in business contexts, specifically the research a company performs before engaging in a financial transaction.
An informed decision is the best decision. Due diligence adds value by evaluating the benefits, costs, and risks associated with an upcoming decision.
Due diligence requires access to highly confidential information from multiple parties. Before technology advances, companies wouldn’t let their confidential information leave the property. This required all interested parties to travel to the company. Now, with cloud technology, all data is uploaded into the cloud, where teams have access to it.
Cloud storage has made due diligence more safe, efficient, and affordable. Some software, like DealRoom, combine diligence management and a VDR into one integrated and platform.Teams have the ability to set permissions, securely share documents, and communicate. Instead of the due diligence process being physical and expensive, it is now happening electronically, in an efficient and cost effective way.
If you happen to find yourself in a due diligence process, it is likely that you will cross paths with a virtual data room.