Business Partnership Due Diligence Checklist Template

What the Business Partnership Due Diligence Checklist Covers

1. 1
   Phase 1

   Partnership Overview & Strategic Fit Assessment

   10 tasks

   Strategic fit assessment should precede all other due diligence. A financially healthy, legally clean, operationally capable partner who is strategically misaligned is still the wrong partner.

   • Define the partnership type and structure — joint venture, distribution agreement, technology integration, co-marketing arrangement, white-label relationship, strategic alliance, or other; confirm the structure is appropriate for the intended collaboration
   • Articulate the strategic rationale — why is this partnership being pursued? What does each party contribute and what does each party gain?
   • Confirm alignment with organisational strategy — does this partnership advance your core strategic objectives or distract from them?
   • Assess the partner’s strategic objectives — are they entering this partnership for reasons that are compatible with yours long-term?
   • Identify the partnership’s key dependencies — what does each party depend on the other for? What is the impact if either party fails to deliver?
   • Assess exclusivity implications — does this partnership preclude other relationships? Does the partner have competing relationships you should know about?
   • Review the partner’s existing partnership portfolio — who else do they work with? Are there conflicts or complementary relationships?
   • Assess timeline alignment — are both parties’ expected timelines and pace realistic and compatible?
   • Define success criteria for the partnership — agree on what a successful partnership looks like for both parties before the agreement is signed
   • Confirm internal stakeholder alignment — who internally needs to support this partnership for it to succeed? Do they?
2. 2
   Phase 2

   Financial Health & Stability Assessment

   10 tasks

   • Request and review the most recent two to three years of financial statements — income statement, balance sheet, and cash flow; confirm they are prepared by a credible accountant and audited where applicable
   • Assess revenue trend — is the business growing, stable, or declining? Is the growth or decline explained by the partner?
   • Assess profitability — is the business generating positive operating cash flow? If not, what is the path to profitability and how long is the runway?
   • Review debt and liabilities — confirm total debt obligations, any outstanding loans, and the ratio of debt to equity or revenue
   • Check credit standing — obtain a business credit report from an appropriate credit bureau; review payment history with suppliers and lenders
   • Confirm the partner has sufficient financial capacity to fulfil their partnership obligations — adequate staffing, infrastructure, and working capital for the committed scope
   • Identify any significant customer or revenue concentration — if a large proportion of revenue depends on one or two relationships, assess the risk of that dependency
   • Check for any recent or pending insolvency proceedings, administrations, or restructuring events
   • Assess funding stability — for VC-backed or PE-backed partners, assess the runway and likelihood of continued investor support
   • Document financial assessment findings — overall financial health rating, key risks, and any conditions or monitoring requirements
3. 3
   Phase 3

   Legal & Corporate Standing Review

   10 tasks

   • Confirm the company is properly incorporated and in good standing — obtain Companies House (UK), Secretary of State (US), or equivalent confirmation of current registration
   • Confirm the company is authorised to operate in all relevant jurisdictions — review business licences, permits, and any jurisdiction-specific operating requirements
   • Review the company’s ownership and corporate structure — confirm the ultimate beneficial owner(s) and review any complex holding structures
   • Conduct sanctions screening — check the company, its directors, and its beneficial owners against OFAC, EU, UN, and other applicable sanctions lists
   • Screen for Politically Exposed Persons (PEPs) — confirm directors and beneficial owners are not PEPs or have disclosed PEP connections
   • Review litigation history — search for any past or pending legal proceedings involving the company, its directors, or its principals
   • Review regulatory history — any regulatory investigations, fines, sanctions, or enforcement actions
   • Confirm intellectual property ownership — any IP material to the partnership is properly owned by the partner and free of encumbrances
   • Review material contracts for change of control or assignment provisions — any customer or supplier contracts that restrict partnership arrangements
   • Engage legal counsel to review findings and advise on any material legal risks identified
4. 4
   Phase 4

   Operational Capability & Capacity Assessment

   10 tasks

   The most common reason business partnerships underdeliver is not strategic misalignment or legal failure — it is operational incapability. The partner genuinely cannot do what they represented they could do.

   • Assess the partner’s core operational capabilities — can they deliver what the partnership requires at the volume, quality, and speed committed?
   • Review team capacity and quality — do they have the right people to support the partnership? Is there key person dependency?
   • Assess operational infrastructure — facilities, technology systems, supply chain, and any other operational assets required to fulfil the partnership commitment
   • Review quality control processes — how does the partner maintain quality standards? Are there ISO or other relevant certifications?
   • Assess scalability — if the partnership succeeds and volume increases, can the partner scale their operations accordingly?
   • Review existing partner and customer load — how many other commitments does the partner currently carry? Will your partnership receive adequate attention and resource?
   • Assess geographic and time zone compatibility — are there operational friction points from geography, language, or time zone differences?
   • Review business continuity arrangements — what happens if the partner experiences a significant operational disruption? Do they have business continuity plans?
   • Confirm insurance coverage — appropriate professional indemnity, public liability, and any other relevant insurance is in place
   • Document operational capability findings — overall capability assessment, capacity risks, scalability assessment, and any conditions
5. 5
   Phase 5

   Reputation & Reference Checks

   10 tasks

   • Conduct online and media research — news coverage, industry press, social media, and any public controversy or negative coverage
   • Review customer and client feedback — Trustpilot, Google Reviews, Glassdoor (for culture), G2, Capterra, or other relevant review platforms
   • Request a minimum of three references from current or recent partners — organisations who have worked with the partner in a similar capacity
   • Conduct at least one back-channel reference — a contact in your network who knows the partner but was not provided as a reference
   • Conduct reference calls with structure — ask specifically about delivery against commitments, communication quality, how they behaved when things went wrong, and whether the reference would partner with them again
   • Review the partner’s public positioning — their website, case studies, and client list; confirm it is consistent with what they have represented to you
   • Assess industry standing — are they respected in their market? Are they members of relevant industry bodies?
   • Check director backgrounds — LinkedIn profiles, prior company histories, and any public adverse information
   • Assess ESG and values alignment — environmental practices, diversity and inclusion record, and any public controversies relevant to your organisation’s values and stakeholder expectations
   • Document reputation findings — overall reputation assessment, reference call summary, any concerns identified, and how they were addressed
6. 6
   Phase 6

   Technology & Data Security Assessment

   10 tasks

   Technology and data security due diligence is non-negotiable for any partnership involving data sharing, system integration, or access to your technology environment. GDPR and equivalent regulations make this a legal obligation, not just good practice.

   • Confirm the partner’s approach to information security — do they have a documented information security policy? Is it current?
   • Review relevant certifications — ISO 27001, SOC 2, Cyber Essentials, or other applicable certifications; confirm they are current and relevant to the scope of the partnership
   • Request a completed due diligence questionnaire (DDQ) — covering access controls, data handling, incident response, and third-party risk management
   • Assess data handling and privacy practices — how will the partner process any shared customer or employee data? Confirm GDPR, CCPA, or applicable data protection compliance
   • Confirm a Data Processing Agreement (DPA) will be required and is appropriate for the scope of data sharing
   • Review incident history — any significant data breaches, security incidents, or regulatory notifications in the past three years
   • Assess third-party risk management — how does the partner manage the security of their own suppliers and subcontractors?
   • Confirm system integration security — for API or direct system integrations, assess authentication standards, data in transit encryption, and access controls
   • Assess business continuity and disaster recovery — what is their recovery capability for critical systems?
   • Document technology and security findings — security posture assessment, data risk assessment, required contractual protections, and any conditions
7. 7
   Phase 7

   Cultural & Values Alignment Assessment

   10 tasks

   • Assess organisational culture fit — how does the partner organisation operate? Is the working style compatible with yours?
   • Evaluate decision-making style — are they fast and entrepreneurial, or deliberate and process-driven? Is that compatible with the pace the partnership requires?
   • Assess communication norms — how do they prefer to communicate? Is their communication style compatible with your team’s expectations?
   • Review their approach to conflict and problem resolution — reference calls are the best source for this; how did they behave when a previous partnership encountered difficulty?
   • Assess commitment to the partnership — is this a strategic priority for them or a peripheral activity? Will it receive the attention it requires from their senior team?
   • Evaluate values alignment — review their public commitments on ESG, diversity, and ethics; confirm alignment with your organisation’s values and stakeholder expectations
   • Assess customer and employee treatment — Glassdoor reviews, employee NPS, and customer feedback all provide signals about how the organisation actually operates
   • Identify potential cultural friction points — different risk tolerances, different quality standards, different approaches to transparency
   • Conduct in-person or video meetings with key partnership contacts — cultural fit is difficult to assess through documents alone
   • Document cultural findings — overall compatibility assessment, specific friction points identified, and how they might be managed
8. 8
   Phase 8

   Partnership Agreement, Governance & Ongoing Monitoring

   10 tasks

   • Engage legal counsel to draft or review the partnership agreement — do not use a template agreement for any material partnership
   • Confirm the agreement covers scope and deliverables — what each party commits to and how performance is measured
   • Confirm the agreement covers exclusivity — what activities or geographies are exclusive, and what are not
   • Confirm IP ownership and licensing — who owns IP created during the partnership? What licences are granted?
   • Confirm revenue sharing, cost allocation, and payment terms — how financial flows between the parties are managed
   • Confirm liability and indemnification — how is liability apportioned for failures by either party?
   • Confirm data protection obligations — DPA, data processing scope, and breach notification requirements
   • Confirm exit provisions — how can either party exit the partnership, under what conditions, with what notice period, and what happens to shared assets or customers
   • Define the governance framework — who leads the partnership on each side, how decisions are made, how disputes are resolved, and how frequently the partnership is formally reviewed
   • Establish an ongoing monitoring programme — annual financial review, periodic performance review, and a structured process for addressing issues as they arise