In October 2025, a major fraud case involving approximately US$875 million was uncovered within a firm in India. The incident involved allegations of forged documents and unauthorized loans taken using falsified signatures, violating the terms of a prior exit agreement between former partners.
This illustrates the risks associated with entering business partnerships without thorough due diligence. Before formalising any agreement, it is essential to evaluate a potential partner’s financial stability, business practices, and legal standing. A structured assessment process not only helps mitigate the risk of financial loss and reputation damage but also lays the foundation for a more secure and sustainable partnership.
Who are extended partners?
Extended partners are entities or individuals, like suppliers, distributors, tech-providers, investors, startup consultants, or joint venture collaborators that support business growth. They bring specialized skills or resources, helping companies scale, innovate, and build resilience.
Benefits of partnership
Strategic partnerships offer multiple benefits, including access to new markets and customers by leveraging a partner’s network and distribution channels. They also allow companies to share financial risks and operational costs, making large projects or expansions more feasible. Partnering with a reputable brand enhances credibility, attracting more customers, investors, and talent. Additionally, sharing skills and resources fosters innovation, fills capability gaps, and accelerates growth through collaborative problem-solving.
What are the risks associated with them?
Partnerships can face challenges when companies have different goals, values, or priorities, leading to disagreements and lack of alignment. If a partner fails to follow legal or regulatory requirements, it can expose both parties to serious risks like fines and legal action, especially in international settings. Cultural differences in business practices or management styles can also cause misunderstandings, slow progress, and affect collaboration.
Key Metrics
- Financial health: Review the partner’s financial health by checking revenue, profits, debt, and liquidity. Identify any risks like unstable cash flow or heavy debt before partnering.
- Legal and regulatory compliance: Verify the partner’s legal status by checking registrations and licenses. Ensure they comply with relevant regulations and review any past litigation or penalties.
- Operational capabilities: Assess the partner’s operations, including technology, supply chain, and production. Check certifications, recovery plans, and delivery performance.
- Organisational fit: Ensure the partner’s culture, values and working style align with yours. A good fit supports smoother collaboration and long-term success.
- Performance and reputation: Review the partner’s track record in meeting key targets like lead generation, sales conversions, and timely payments. Check for any past disputes, regulatory issues, or negative publicity that could affect your reputation or operations.
Role of due diligence
Due diligence plays a critical role in extended partnerships assessment. It involves carefully reviewing a potential partner’s financial health, legal compliance, operational capabilities, and reputation before entering an agreement. This process helps reduce risk, ensure both parties are aligned in goals and values, and supports better decision making. Continuous due diligence is also important to monitor performance and maintain a strong, reliable partnership overtime.
Conclusion
Building and sustaining extended partnerships requires more than just strategic intent, it demands clarity, accountability, and continuous evaluation. As businesses grow increasingly interconnected, the strength of their partnerships often defines their resilience and adaptability. By investing in structured assessments and fostering transparent collaboration, companies can make partnerships long-term assets that drive innovation, trust, and success.
To strengthen your extended partnerships, connect with us at bd@alea.asia for more.