Counterparty check before a deal: what matters

A counterparty shows only the part of information it wants to show. A presentation, negotiations and commercial proposal do not replace risk review.

The review should cover owners and beneficial owners, litigation, enforcement records, connected companies, director history, nominee indicators and reputation background.

It is also important to review the group around the legal entity. Risk may sit with a former owner, affiliate, supplier, intermediary or actual controller.

Pre-deal intelligence helps change terms: request warranties, refuse advance payment, add protections or stop negotiations.

A useful risk conclusion does not ask whether the company exists. It asks what management risk the client receives.