Definition of due diligence

due diligencenoun

sự thẩm định cẩn thận

/ˌdjuː ˈdɪlɪdʒəns//ˌduː ˈdɪlɪdʒəns/

The term "due diligence" originated in the context of property transactions during the 19th century in England. The phrase literally means "doing one's duty" or "taking reasonable steps to uncover all the necessary facts" (Merriam-Webster). In real estate transactions, the term refers to the thorough investigation and evaluation of a property before making a purchase decision. This investigation involves reviewing legal documents, inspecting the property's physical condition, and checking the title's status to ensure there are no liens or encumbrances. The procedure serves to protect the buyer from any hidden defects, liabilities, or risks associated with the property. Over time, due diligence has expanded beyond just property transactions, and the concept now applies to various financial and commercial contexts as well. In other industries, due diligence refers to the comprehensive evaluation of a business's financial and operational status before entering into a deal, merger, or acquisition. Like in real estate, the goal is to minimize risks, uncover any potential issues, and make informed decisions. Overall, due diligence is an essential component of responsible decision-making, especially in high-stakes transactions, as it allows parties to mitigate risks and make informed decisions based on accurate, thorough, and up-to-date information.

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reasonable steps taken by a person or an organization to avoid committing a tort or an offence

các bước hợp lý được một cá nhân hoặc một tổ chức thực hiện để tránh phạm tội hoặc vi phạm pháp luật

Example:
  • The company had taken all reasonable precautions and exercised due diligence to avoid the offence.

    Công ty đã thực hiện mọi biện pháp phòng ngừa hợp lý và thực hiện sự thẩm định cần thiết để tránh vi phạm.

a careful investigation of the state of a business by a person or organization that is thinking of buying it or investing in it

một cuộc điều tra cẩn thận về tình trạng của một doanh nghiệp do một cá nhân hoặc tổ chức đang có ý định mua hoặc đầu tư vào doanh nghiệp đó thực hiện

Example:
  • Investors are encouraged to perform their own due diligence on a company prior to investment.

    Các nhà đầu tư được khuyến khích tự mình tiến hành thẩm định về một công ty trước khi đầu tư.