Due diligence is the process of systematically researching and verifying the accuracy of the business information. Mostly the term originated in the business world, where due diligence is required to validate financial statements to ensure that all stakeholders associated with a financial endeavor have the information they need to assess risk accurately. In compliance, due diligence describes the degree of effort required by law or industry standard. In business sale, due diligence is the exercise done after the acceptance of an offer to validate the information.
As you begin evaluating the business, verify the values and examine the status of the following items:

• Company Incorporation and Ownership
• Inventory
• Furniture, fixtures, equipment and building
• Copies of all contracts and legal documents
• Tax Return
• Financial Statements
• Sales Records
• Complete list of liabilities
• All accounts receivables
• All accounts payables
• Debt disclosure
• Merchandise returns
• Customer patterns
• Marketing strategies
• Advertising costs
• Product / Service Pricing
• Industry and market history
• Location and market area
• The business's reputation
• Seller-customer ties
• List of current employees,salaries and organizational chart
• Insurance
• Product / Service liability

What do we look out for during due diligence?

• Investor Due Diligence
• Partnership Due Diligence
• Deal Breakers
• Valuation Issues
• Key Market Drivers
• Potential Disruptors
• Negotiation Points
• Identifying Hidden Value
• Warranties, Transition & Completion Issues
• Complainces Issues
• Integration & other Issues