Finding the right partners to grow your business internationally

1. Finding the right partners to grow your business internationally Businesses quickly realise that if they want to internationalise they are going to have to deal with local partners, intermediaries and agents in order to succeed. The benefits of internationalization can be many but companies who contract such intermediaries, regardless of their scope or location, should be alert to the many risks that can flow from these agreements. Whether your partner only promotes your products/services or whether they buy and then hire or sell them on, whether they act as an introducer to potential clients or as an advisor, the following risks should be considered and resolved before proceeding. A. Business Risks: Does the intermediary have the requisite skills and knowledge to achieve your goal? Are you being clear about your goals and expectations? Can they demonstrate that they have the necessary back-up resources? Do they promote/sell competing products or services? Do they share your company’s values and approach to business? Do you have control over the clients they approach, introduce and/or contract with? How easy would it be to get out of the agreement? Are there restrictions under local laws or practical difficulties in ending the relationship? B. Compliance and Regulatory Risks Is the intermediary aware of UK anti-bribery and corruption (ABC) laws and applicable foreign ABC laws? Have they previously been investigated for or found guilty of breaches of ABC laws? Will they need to deal with public/government officials in connection with the agreement? Do they have robust anti-bribery and corruption policies, procedures and training programmes? Is the intermediary on any UK sanctions list? Are the products covered by the agreement, subject to UK or any other applicable export controls? Will you know and can you object to any potential end user?

2. How robust and accurate is their record keeping? Do they deal in cash? Are you entitled to audit their records and books? C. Legal Risks As we have covered in earlier Lexplore articles, your agreement should be very clear on the following: What will the intermediary be doing? What is your mechanism for monitoring their activity? How are they expected to perform? Is there a geographical limit? Should that be set nationally or regionally? Will you or others be able to operate in that area or do they have exclusivity? How much will they be paid for their services and when? How long will the agreement last? What will indicate success or otherwise? What are the grounds for termination? Points in A and B above should be addressed by undertaking thorough due diligence on the intermediary. Evidence should be provided which satisfies you that identified risks have been managed. Any questions not fully answered need to be followed up and the intermediary must be aware of your values, policies and intolerance of any ABC non-compliance. Third parties and software can be used to gather information but personal correspondence, telephone calls and meetings are invaluable. Any company that proceeds with an intermediary agreement without having first completed comprehensive due diligence and ensuring all potential risks have been addressed, put themselves at risk of being found guilty of the same bribery and corruption offence as its intermediary and without the benefit of the ’adequate procedures’ defence. Any breaches by the intermediary, carried out in the name of the business, will of course also be breaches by the business. As well as the significant financial penalties that can be imposed for such offences there will be immeasurable reputational damage that will undoubtedly mean other clients will avoid or be unable to do business with you in the future. Remember also that the agreements you sign and the business that is conducted may one day be the subject of due diligence on your company by a future customer, partner or even acquirer. Lex Energy is renounced legal consultancy in UK with complete knowledge of all sectors and phases of the energy industry. For more details visit http://www.lex-energy.co.uk