What is Due Diligence?
Actually checking something before committing money to it, rather than deciding you like it.
Due diligence is the investigation you do before a deal: reading the financials, verifying the claims, checking that the people are who they say, and finding out what the seller would rather you didn't. In corporate transactions it's a formal process with lawyers. For everyone else it's the difference between research and enthusiasm. 'DYOR' (do your own research) is the crypto translation, and the principle is identical: verify before you trust.
The practical form is unglamorous. Does this business exist in a registry. Does the person have a history. Is the revenue claim gross or net. Who else has done this, and what happened to them. Can the central claim be checked by anyone other than the person making it.
Almost every scam survives on the assumption that nobody will spend twenty minutes checking, and almost every scam is defeated by someone who does. Urgency is the reliable tell: pressure to decide now is pressure to skip exactly this step. The five minutes of checking is always cheaper than the loss.
Related terms
Definitions from the Business Dog Glossary — educational, occasionally satirical, never financial advice.