Due Diligence

DD covers financial, legal, operational, and commercial dimensions of a target. The goal is to verify what a seller or fund manager is representing, surface hidden risks, and gather enough information to make a reasoned decision. Families that skip or compress this step commonly discover problems — undisclosed liabilities, overstated revenues, or governance weaknesses — after money has already moved. The due diligence overview explains how this process typically fits into a family office investment program.

Imagine a family considering a direct stake in a regional healthcare business. Financial due diligence would examine historical cash flows and working capital; legal due diligence would review contracts, litigation, and regulatory licenses; commercial due diligence would assess whether the business's competitive position is durable. Each workstream feeds into the investment committee's final deliberation — see investment committees for how families structure that decision layer.

A common confusion is treating DD as a one-time checklist rather than an iterative process. As new information emerges, earlier conclusions may need revisiting. Families also sometimes conflate financial DD with operational due diligence, which focuses specifically on a manager's infrastructure rather than the underlying asset. Both matter, but they ask fundamentally different questions and are often conducted by different people.