Due diligence isn’t an expression that will get your blood pumping however it is a crucial business practice when you are selling or buying a company. It is the process of examining all aspects of the company to ensure that all involved parties have a clear understanding of what they are getting into.

The process can last from 30 to 60 days, but it should begin as soon as you can to avoid miscommunications https://dataroomapps.com/types-of-due-diligence/ and legal ramifications. It is crucial that companies prepare ahead of time by establishing a document library filled with all relevant documents and records. This will save time and cost when it comes to the actual investigation.

There are many types of due diligence, depending on the nature of deal and the business. Here are some of most frequently used types:

Legal Due Diligence

This type of due-diligence investigation focuses on the potential liabilities that could affect the success of a deal. It usually involves analyzing every contract that is essential that include licensing agreements, partnership agreements and term sheets, as well as loan and bank financing agreements.

Commercial Due Diligence

This includes evaluating a company’s market based on its size, growth and competition. This can include customer interviews as well as assessing competition, and preparing an extensive analysis of the company’s strengths as well as weaknesses.

This type of due-diligence investigates every detail available regarding the possibility of a case, which includes any evidence that could be against an accused. It also requires assessing the information regarding exulpation that is available. When deciding whether to bring charges against an individual, a prosecutor will make this decision.