Home > Newark > Due Diligence Matters to Whom?

Due Diligence Matters to Whom?

What is “Due Diligence”?  This Wkipedia definition is rather lengthy, but it pretty much sums it up.  Mos Def, resurrected this phrase for me when he portayed  an aspiring entrepreneur in “16 Blocks” that just wanted to start up his own baking and pastries business.   His use of it during the movie has spawned my reinterest in the usage of the word.

But nowadays when I am speaking to anyone about what it is I am doing and no matter how I explain what it is from my standpoint, it would seem I am not getting my point a across.  I know I can speak and you reading this know very well that I write in a style that does show a propensity to paint a vivid picture through words.

Due diligence” at its core is simply common sense. From earliest times, anyone considering a decision used due diligence to arrive at the best answer. Over time, due diligence became more popularly used for essentially any type of transaction, where you would perform due diligence before the transaction to make sure you knew as much about the transaction as possible, before you would actually consummate the transaction. In the mid-20th century, due diligence began to be used in the financial industry, starting in the U.S. because of the Securities Act of 1933. Over time however, the term became very confusing, with many different industries using the term for a very wide range of concepts. The most common usage of the term was in the legal profession, and the second most common was in the financial profession. Most often used in conjunction with mergers and acquisitions, due diligence was also used in public and private equity and debt offerings, usually known as public offerings (such as IPOs) and private placements. Many people used and continue to use the term due diligence in a very limited way, referring to the act of investigating a person or an organization, typically known as background investigations. In the early 21st century, a new form of due diligence appeared, much more comprehensive. What is perhaps most interesting, while the new due diligence is a methodical and thorough scientific method, it has gone back to the earliest, simplest, and best definition, common sense, and perfected a modern process of one of humankind’s most obvious fundamental tenets. Before making a decision, follow a careful process to make sure you know everything possible, so that you make the most informed decision, whether in business, education, government, or your personal life.

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