The duty to investigate or due diligence is one of the fiduciary duties of corporate board members. Association board members must make a reasonable inquiry before making decisions. This does not mean they must do everything themselves. Board members can rely on other professionals such as attorneys, accountants, insurance brokers, reserve study providers, and licensed contractors to gather information for their review and discussion.

A board member cannot close his or her eyes to what is going on in the conduct of the business or the corporation and have it said that he or she is exercising good business judgment.

Sometimes due diligence will involve a feasibility study. A feasibility study is a comprehensive analysis assessing a proposed project's practicality, viability, and potential for success before significant investment, examining factors like technical, economic, legal, operational, and market aspects to help stakeholders decide whether to proceed, modify, or abandon the idea. It identifies strengths, weaknesses, opportunities, and risks, providing data for informed decisions on whether a project is a worthwhile use of time and resources.

HR Due Diligence

HR (Human Resource) due diligence is an extremely important part of the due diligence process when an acquisition or merger is being considered. It targets all employees and independent contractors who have a relationship with the company being investigated. HR is one of the areas that presents the highest risk to the owners of a company. Some of the areas of investigation include employment contracts, independent contractor agreements, employee manuals, policy manuals, bonus plans, severance agreements and correspondence sent to or from employees and independent contractors. The possible misclassification of employees must be evaluated very carefully.