Regulatory Due Diligence: An Ounce of Prevention

Originally Published June 2000

Jeffrey N. Gibbs

Due diligence audits are an integral part of modern business life. Companies are expected to conduct adequate due diligence reviews before entering into significant business transactions. For example, when one healthcare company announced last year that it would have to restate earnings because of a company it had acquired—causing the value of the company's stock to plunge by billions of dollars in a single day—the Wall Street Journal reported that "Several analysts wondered why [the company] hadn't conducted a comprehensive audit of the [seller's] operations prior to closing the deal."