Due Diligence can mean a lot of different things to different people and one of the most highly searched terms on the internet for this subject is “due diligence meaning”. So, a lot of people are confused – they hear the term “due diligence” and they wonder what it is, whether it relates to them or their business and why they need to know about it.
So what is the definition of due diligence?
The Oxford Learner’s Dictionary defines due diligence in two ways:
1. (law) reasonable steps taken by a person or an organization to avoid committing a tort or an offence
“The company had taken all reasonable precautions and exercised due diligence to avoid the offence.”
2. (business) a careful investigation of the state of a business by a person or organization that is thinking of buying it or investing in it
“Investors are encouraged to perform their own due diligence on a company prior to investment.”
So as not to be Oxford biased, the Cambridge Dictionary defines due diligence as:
the action that is considered reasonable for people to take in order to keep themselves or others and their property safe:
· exercise/demonstrate due diligence People have to exercise due diligence and watch what's being bought on their credit cards.
the detailed examination of a company and its financial records, done before becoming involved in a business arrangement with it, such as buying it or selling its shares to investors:
· The buyout group's due diligence is expected to run till late March.
· carry out/conduct/perform due diligence We had the opportunity to do due diligence on the books and we think $518 is a fair offer.
· due diligence exercise/investigation/process
· due diligence report/review/assessment
For Cedar Rose, the meaning of due diligence is all of the above and for most of the reasons provided above, plus all those listed below:
· To protect our customers from unwittingly breaking the law by committing an offence against the Anti Bribery act or the Foreign Corrupt Practices Act, potentially leading to enormous fines.
· To secure our clients from engaging in transactions with sanctioned, criminal or fraudulent companies and losing money or being fined accordingly.
· To ensure that our customers know exactly who they are trading with when dealing with companies and people overseas and who those companies and people are linked to.
· To prevent investors unwittingly transferring funds to known terrorist organisations, sanctioned entities, illegal arms dealers, drug traffickers or shell companies.
· To give our customers the peace of mind to know they are operating in a compliant way, not breaking any local or international laws and are looking after their bottom line as well as their company’s reputation.
· To exercise sensible enterprise risk management, good corporate governance and international compliance.
We believe the meaning of due diligence is to not only check all the boxes on the due diligence checklist for compliance purposes, but to be confident in the business decisions you make based on the intelligence at your disposal. Enhanced Due Diligence can give our customers’ a unique advantage over their competitors because they will truly trust their business relationships and know exactly what to avoid and where to expand.
In our opinion, due diligence means clarity, confidence and calm. Do the right investigations at the start of any business relationship and the rest will be plain sailing.