DUE DELIGENCE – For entrepreneurs

Currently, many local companies are thinking about finding new partners abroad. International transactions can help not only expand the geography of the company and receive additional income, but also gain a reputation as a serious company operating both in the national and international markets. Unfortunately, the international activity of a legal entity is accompanied not only by new opportunities and prospects, but also by a number of difficulties and risks. One of the difficulties mentioned is the verification of a foreign counterparty.
Alfa Resonance Capital Ltd believes that the process of verifying the reliability of a future partner cannot be universal, because, under various circumstances, the need to obtain certain data can be of indirect value or vice versa. For example, if the contract provides for prepayment, then the small scale of the business of a foreign partner or the lack of experience in this business will not be decisive. And, on the contrary, with deferred payment, indicators of its solvency come first. However, if we are able to get the maximum information about the future partner, then we will be interested in:
  1. The business reputation of the partner, which is determined by:
  • thoroughness and conscientious fulfillment of obligations;
  • experience in a specific business area;
  • the desire to take into account the proposals and wishes of the counterparty and solve all arising difficult situations through negotiations.
  1. Solvency:
  • accuracy of payment execution and terms of payment of bills;
  • the composition of banks and other financial institutions that conduct business with the company;
  • total amount of financial assets of the company;
  • lack of litigation, overdue payables.
  1. Counterparty solidity:
  • number of employees;
  • the number of enterprises and the size of production facilities;
  • degree of business diversification;
  • term of work in the international market;
  • regular customers of the company.
The exchange of documents confirming the authority of a potential partner is a necessary step in concluding an international contract. If both parties are interested in a project for the implementation of which a contract is signed, the provision of the necessary information and documents does not raise any questions or contradictions. The powers of the person signing the contract must be confirmed by constituent documents. Certified copies should be requested. If the partner is represented by a person acting on the basis of a power of attorney or other similar document, then a genuine copy is required.
As a rule, any state has a register / register of legal entities. All these databases are open to users of other countries, it is possible to transfer payment for the provision of data to them and get information about the company of interest.
However, according to Alfa Resonance Capital Ltd, the most complete, in-depth and up-to-date information about a potential foreign partner can only be obtained using the service of local specialized firms. Alfa Resonance Capital Ltd has its own database, thereby offering thorough verification services to a potential partner or counterparty in 2 main forms of work – stationary and on-site.