Definition
Due Diligence
The comprehensive research and analysis process conducted before making an investment decision.
Due diligence is the systematic investigation of a potential investment opportunity. For hedge funds and private equity, this includes analyzing financials, competitive positioning, management quality, market dynamics, and risk factors. Primary research through expert networks is a key component of modern due diligence, providing insights that cannot be found in public filings. The depth of due diligence varies by investment type, with private equity deals typically requiring more extensive research than public equity positions.