It’s whether it’s a new car, a house or an entire company, most people want to be aware of the good and negative aspects of whatever they are spending time, money or energy on. They want to be sure they’re making the right decision and won’t be astonished by unpleasant surprises later on. That’s why they conduct due diligence, a procedure that looks at a purchase or investment in order to assess risk.

There are many different kinds of due diligence, such as legal, financial, environmental, commercial and intellectual property. The areas of focus depend on the type of due diligence is conducted, but can include licenses, loans and contracts as well as employment issues, regulatory concerns, property, and any pending litigation.

Financial due diligence is the process of verifying and assessing the underlying financial information of a company including earnings, profits, assets, cash flow, liabilities, and debt. This could include analyzing ratios, using financial tools and analyzing the business to estimate future performance.

Commercial due diligence analyzes the virtual boardroom company’s competitive and market, and can help to determine whether a business will be profitable in the long run. It can also reveal synergy possibilities and the success of the merger or acquisition.