Before you sign a deal

Why check a counterparty?

Pitch decks, websites and introductions describe a company as it wishes to be seen. Due diligence tests that picture against what can be found independently. The aim is not to catch anyone out. It is to make sure you know who you are dealing with before money, reputation or exclusivity is at stake.

This applies to acquisitions and investments, and also to joint ventures, large supply contracts, distribution agreements and agency appointments. The bigger the commitment, or the harder it is to exit, the more the research is worth.

What should you look into?

• Ownership and beneficial owners: who holds the shares, and who ultimately controls or benefits from the company, including through other companies or nominees.
• Directors and key people: who runs the business, their other directorships and interests, and whether their careers match what you have been told.
• Litigation history: past and current court cases involving the company or its principals, searched through official channels.
• Sanctions and PEP exposure: whether the company, its owners or its directors appear on the UN, AU, EU or OFAC sanctions lists, and whether anyone is a politically exposed person.
• Adverse media: published reports of fraud, corruption, disputes or other conduct that could affect you.

Corporate due diligence covers the company, and integrity due diligence covers the people behind it. Sanctions and PEP screening can run alongside either.

Which red flags deserve a closer look?

• Reluctance to name the beneficial owners, or an answer that changes when you ask again.
• Layers of companies across several countries with no clear commercial reason.
• Frequent or recent changes of directors or shareholders shortly before the deal.
• A pattern of lawsuits with suppliers, partners or staff.
• A name close to an entry on a sanctions list, or links to a politically exposed person that were not disclosed.
• Press coverage of disputes or misconduct that the counterparty did not mention.
• Pressure to sign quickly, or resistance to any checks at all.

A red flag is a question, not a conclusion. Many have an ordinary explanation. What matters is whether the explanation holds up and whether it was offered openly.

When should you start?

Earlier than feels necessary. Research started after terms are agreed tends to be rushed, and findings arrive when walking away is costly.

1. 01

   At first serious contact

   Run a sanctions and PEP screen on the company and its principals before sharing sensitive information.

2. 02

   Before heads of terms or exclusivity

   Commission corporate due diligence, and integrity due diligence on the key people, while you still have options.

3. 03

   While negotiating

   Put questions raised by the research to the counterparty and note how they answer.

4. 04

   Just before signing

   Repeat the sanctions screen, because lists change and the first result reflects the date it was run.

How long the research takes turns on how many companies, people and countries are involved. It depends on the case; we give an estimate before work begins.

What you receive

• From corporate due diligence: a report on the company's status, its ownership structure and any risk indicators found.
• From integrity due diligence: a confidential assessment of the principals' careers, business interests and reputation in public records and media.
• From a global sanctions check: a record of the lists screened, any possible matches and how each was resolved.

Share the reports with your lawyers and advisers before you sign. We can sign a non-disclosure agreement (NDA) on request. Initial consultations are without obligation; charges apply only once work begins.

Terms in this guide

• Due diligence
• Beneficial owner (UBO)
• Politically exposed person (PEP)
• Adverse media

Questions