We are dealing with the term DUE DILIGENCE. What is due diligence? The video not only shows the meaning and definition of due diligence, but also an example of due diligence when taking over a company.

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Hello and welcome back to Speak Life Shaf. You know how it goes, here I help you understand all the confusing business jargon and teach you a thing or two about being an entrepreneur along the way. Today I'm going to talk to you about something really important, in business speak this is often abbreviated to DD, we are of course talking about Due Diligence.

But first, I'm going to ask a friend to explain to you what due diligence is. Here's Rab, the rock star. He lived in the Stone Age and was the world's first entrepreneur. That's right, the very first entrepreneur. He had a business idea to make and provide tools to hunters to catch their prey. His business soon took off and Rab did really well. He had employees and eventually had to move to larger premises, a larger cave, to accommodate his growing business. After many, many years, Rab considered retiring and selling his business to a rival, Pete Pebble. The potential buyer, Pete, investigated Rab's business. He looked at how it was run, found out how much Rab charged his customers and what he reinvested his profits in. If Rab had kept written records instead of just scribbling them on the cave wall, Pete would have looked at those too! Essentially, Pete was doing due diligence on Rab's business before a deal was made. As a side note, Rab decided not to retire. He didn't like the cut of Pete's loincloth and refused to sell to him. In the end, Rab's daughters Boulder and Purity took over the business. So our friend Rab can add succession planning to his list of entrepreneurial accomplishments.

Today, due diligence is an investigation or due diligence that a company or individual must complete before entering into an agreement or contract with another party. The goal is to identify potential problems or unexpected liabilities. It is used when entering into a partnership or an important contract.
A good example, similar to Pete Pebble, is when someone is evaluating a business or company with a view to buying it. Due diligence means that any offer is well thought out, all risks, costs and benefits have been considered and taken into account, and the price offered reflects this. One thing business people – and more importantly, investors – don't like is surprises, and due diligence theoretically allows them to make informed decisions and avoid nasty surprises at the end of the transaction. Buyers get exactly what they pay for.
The problem with this process is that it can take forever! Everyone wants a piece of the pie. Realtors, lawyers, accountants can all be involved and you can bet they all want different information that can sometimes be difficult and time consuming for the seller to obtain. Typically, buyers will want to look at records, accounts, assets, operations, competitor and market comparisons, and an analysis of intellectual property rights.
Due diligence is one of the most important things you can do before you sign. We do it all the time, and even if we find something troubling, it doesn't always mean the deal is off. We simply consider changing the terms of the deal. Now that you know what this means, don't forget to do it in your business life! Let me know what you think. Like, comment, and remember to subscribe to my YouTube channel.

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