Due Diligence assesses a merger/acquisition from a commercial, financial and legal point of view. It is concerned with understanding the target business, confirming what the prospective acquirer believes it is purchasing, unearthing any risks, identifying negotiating issues and assisting post deal integration planning. Skeletons discovered in the due diligence process would not normally break a deal, but provides negotiating issues that feed into valuing the purchase. 

A "Due Diligence" investigation into the target company is to disclose to the investor all relevant information, so that the selling group would not be held liable for nondisclosure of information that failed to be uncovered in the process of that investigation.

Every seller has certain knowledge that they don't want an investor to discover. The question is the investor going to learn their secrets before or after they acquire? A process of enquiry and investigation made by a prospective acquirer in order to confirm that it is acquiring what it thinks it is purchasing.

A proper due diligence goes far beyond the financial analysis. Investors often are trapped looking solely at financials and completely forget about the other key areas that can cause problems later. It's a recipe for disaster!

Due diligence is the way to discover everything before an investor invests. Once the deal is closed it's too late! There's little or nothing that can be done about it. The consequences can be enormous.