Practical Law Glossary Item 8-382-3425 (Approx. 2 pages)
Glossary
Due Diligence Out
A condition precedent that permits a party to not complete a transaction if its due diligence review has not been completed with satisfactory results before the closing date. For example, in the finance context, a due diligence out is included in commitment letters to permit the lenders to refuse to lend money if they are not satisfied with the results of their due diligence review, allowing them to get "out" of their commitments to lend. In the M&A context, a due diligence out gives the buyer a right to refuse to close the transaction or, in some cases, terminate the purchase or merger agreement.