A process to look closely at the operations of an entity either prior to sale or purchase or to consider an appointment to the board.
During a sale and purchase process, or merger or acquisition, the prospective purchaser is often permitted to investigate the records, financial and legal, to assist in determining a valuation for purchase. Due diligence can also refer to when a member is considering an appointment and the process of due diligence will determine whether the member is willing to commit to the company and whether the rest of the board is willing to proceed with the invitation to the member to join the board. (IoD BP 1998/6)