What is the primary purpose of due diligence in an acquisition?

The primary purpose of due diligence in an acquisition is to review financial, legal, and operational details. This process involves conducting a comprehensive assessment of the target company's records, performance, and potential liabilities. Due diligence ensures that the acquiring party has a clear understanding of what they are purchasing and can identify any risks or issues that may affect the value or operation of the business post-acquisition.

By examining these details, the acquiring company can make informed decisions about the transaction, ensuring they are aware of any challenges that might arise after the deal is completed. This thorough investigation is crucial as it helps validate the information provided by the seller and aids in confirming the overall value and viability of the acquisition.

In contrast, while negotiating better deal terms and finalizing the closing process are important aspects of the acquisition process, they are secondary to the primary function of conducting due diligence. Creating a marketing strategy for the business doesn't relate directly to due diligence; it is an entirely different process focused on the operational strategy after the acquisition has taken place.