what is financial due diligence

Financial due diligence is an investigation, audit, or review performed to confirm facts or details of a matter under consideration, particularly in the context of business transactions, investments, or mergers and acquisitions. In the financial world, it involves examining the financial records of a company to determine their accuracy and truthfulness. This process typically includes reviewing audited financial statements, balance sheets, cash flows, projections, and other financial information to assess the company's financial performance and identify any potential risks. Financial due diligence is essential for investors and companies engaging in M&A transactions to make informed decisions and mitigate risks