Business Partner & Vendor Due Diligence: A Practical Checklist

A new partner promises a big distribution network. A supplier offers prices 20% below the market. An investor wants to come on board quickly. Deals like these build businesses, but they also make up a large share of the fraud cases we investigate. A few days of due diligence before signing is the cheapest insurance a business can buy.

When You Need Due Diligence

• Entering a partnership, joint venture or franchise agreement
• Appointing a distributor, dealer or channel partner, especially on credit
• Onboarding a large supplier or paying a significant advance
• Bringing in an investor or selling a stake
• Acquiring a business or its assets
• Hiring a senior executive who will control money or key relationships

The Desk Checklist: Public Records

1. Company and director records (MCA)

• Confirm the company exists and is "Active" on the MCA portal, not struck off or under liquidation
• Check incorporation date: a company formed last month claiming 15 years of experience is a warning
• Review directors and their other directorships; look for links to closed or defaulting companies
• Check registered charges, which show loans secured against company assets
• Look at filed financial statements and whether annual filings are up to date

2. GST and tax

• Verify the GSTIN on the GST portal: legal name, status, address and type of business
• Check return filing history; long gaps or cancelled registration are red flags
• Match the PAN and legal name across invoices, agreements and bank details

3. Litigation and defaults

• Search eCourts and High Court records for the company and its promoters
• Look for cheque bounce cases, recovery suits and insolvency proceedings
• Check for regulatory actions where relevant (SEBI, RBI, FSSAI, pollution boards)

4. Digital footprint

• Website age and ownership, and whether contact details match the official records
• Customer reviews, complaints on consumer forums and news coverage
• Social profiles of promoters: do career claims match reality?

The Field Checklist: What Records Miss

Paper companies can look perfect online. Field verification tells you whether the business is real:

• Site visit: does the office, warehouse or factory exist, and is it operating at the claimed scale?
• Market reputation: discreet enquiries with suppliers, customers, former employees and local traders
• Payment behaviour: does the party pay suppliers on time, or are there unpaid dues in the market?
• Promoter background: previous ventures, failed businesses, disputes and lifestyle versus declared income
• Hidden relationships: links between the party and your own employees or competitors

Red Flags That Should Stop a Deal

• 🚩 Reluctance to share company documents or let you visit the premises
• 🚩 Pressure to sign or pay quickly, with "limited time" terms
• 🚩 Requests to pay into a personal account or an account in a different name
• 🚩 Recently incorporated company with big claims of history and clients
• 🚩 Directors linked to several struck-off or defaulting companies
• 🚩 References who are hard to reach, or who turn out to be related to the promoter
• 🚩 Pricing or returns that are too good to be true
• 🚩 Cancelled GST registration or long gaps in filing

Our Due Diligence Process

Step 1: Scoping call

We understand the deal, the amount at stake and what decisions depend on the report.

Step 2: Records research

Company, director, tax, litigation and digital footprint checks across public sources.

Step 3: Field verification

Site visits and discreet market enquiries in the cities where the party operates.

Step 4: Written report

Clear findings, supporting evidence and a risk rating, so you and your lawyer or CA can decide whether to proceed, renegotiate terms, ask for security, or walk away.

Already suspect a problem inside the business? Read our guide on the early warning signs of corporate fraud, or see how we handle employee background verification.

Frequently Asked Questions