Financial due diligence is a step in the M&A process for verifying that the financial statements of the target company have been properly prepared and that there are no assets of questionable value or liabilities that have not been recorded when your company conducts a stock acquisition or merger.

During the M&A process, your company will consider the M&A scheme, price, and the like with reference to the materials presented by the target company. The materials that form the basis for your company’s decision need to be examined by a specialist to determine whether they’re appropriate or not, and this examination is called due diligence. Generally, due diligence is classified into business, legal, and financial.