Due diligence is the process of thoroughly investigating and evaluating a business or investment opportunity before making a decision. This involves reviewing financial records, legal documents, and operational practices to ensure that all relevant information is considered. It helps identify potential risks and benefits associated with the opportunity. In the context of mergers and acquisitions, due diligence is crucial for both buyers and sellers. For example, a company like Company A may conduct due diligence on Company B to assess its financial health and market position. This careful examination helps ensure informed decisions and reduces the likelihood of future problems.