Five questions to ask before choosing a local partner
A local partner can save you years, or drag you into problems that aren't yours. These questions reveal the difference early.
In most emerging markets, investors come in through a local partner: a distributor, an agent, or a joint-venture partner. A good partner knows the rules, the people and the way. The wrong one passes its reputation, disputes and connections on to you. Before signing, we always ask these five questions.
1. Who really owns the company?
The commercial register lists the registered shareholders, not necessarily the ultimate owner. Trace ownership layer by layer until you reach named individuals, and watch for holding companies in third countries and ownership through relatives.
2. Is it connected to a government official?
A connection to an official is not a problem in itself. It becomes a risk when that official influences decisions about your project, or when the connection is undisclosed. You want to know it and manage it, not be surprised by it.
3. What does the market say about it?
Global databases don't catch everything. Local press in the local language, court records, and conversations with suppliers and competitors reveal what published reports don't.
4. Is it facing disputes or litigation?
An occasional commercial dispute is normal. What deserves attention is a pattern: repeated cases with former partners, tax disputes, or corruption investigations.
5. Is it on a sanctions list, or close to one?
Screening the company name alone is not enough. Related companies, owners and directors need screening too, because sanctions can reach the whole network, not just the registered name.
Answering these questions doesn't mean walking away at the first concern. Most concerns can be handled with conditions in the contract or a different structure for the partnership. What matters is that you go in knowing.