Jurisdiction(s):
United Kingdom

Key definition

Due diligence definition

What does Due diligence mean? In legal practice, due diligence describes (1) compliance steps to prevent offences; and (2) pre‑transaction investigation in corporate and finance work. As a statutory defence to many strict‑liability and regulatory offences (for example under the UK Consumer Protection from Unfair Trading Regulations 2008 and the Food Safety Act 1990, and under Ireland’s Consumer Protection Act 2007 and food legislation), it requires the defendant to show that all reasonable precautions were taken and all due diligence was exercised to avoid the commission of the offence. Depending on the statute, this may place a legal or evidential burden on the defendant,...

Due diligence in UK public takeovers: purpose, scope, hostile/recommended approaches, Rule 21.3 equality, shareholder information rights, teams and confidentiality agreements

Published by a LexisNexis Corporate expert

Practice notes

This Practice Note outlines how an offeror conducts due diligence in a public takeover. It reviews the aims and likely scope of the exercise, the stance to be taken on hostile bids, the shareholder data a bidder may legitimately request, and key matters under the City Code on Takeovers and Mergers (the Code), including the obligation to furnish equal information to rival bidders. It also explains how the offeree can safeguard its position through confidentiality agreements.

Purpose

Due diligence gives a prospective buyer the chance to scrutinise the target’s affairs, confirm that trading aligns with market expectations, and check for any material commercial, financial, legal or regulatory concerns that might affect valuation or willingness to proceed. Findings may shape deal structure and flag conditions that must be addressed before the offer advances, such as competition notifications or clearances. A core principle of the Code is that an offeror should declare a firm intention to bid only after the most careful and responsible analysis and when it has every reason to believe that it can...

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Web page updated on 21/05/2026

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