The deep background check an investor or acquirer runs before a deal closes, going through your finances, contracts, cap table , code, and customer numbers to confirm the company is really what the pitch said it was.
In 2011 Hewlett-Packard paid $11.1B for the British software maker Autonomy. Barely a year later HP took an $8.8B writedown and accused Autonomy of inflating its revenue before the sale. The deal became the textbook case for why financial due diligence on an acquisition target has to be ruthless: HP's own bankers and accountants had signed off, and it still cost shareholders almost nine billion dollars.
