Counterparty Diligence — First Pass

What this skill does

Produce a first-pass diligence note on a counterparty the user's organization is considering doing business with. The reader is a procurement lead, vendor-risk analyst, partnerships or BD manager, operations head, corporate development associate, or investor who needs an initial view fast. The note helps them decide whether to take a meeting, prepare sharper diligence questions, and identify what materials to request next.

This is explicitly not full diligence, a security or financial audit, a legal review, or a recommendation to sign, buy, partner, or invest. The value is in separating what's known from what's unknown and turning that gap into a concrete next-step list. Be useful, not exhaustive.

The five core questions

Organize the analysis around these five questions. They are the spine of the note — every section should ultimately serve one of them:

1. Are incentives aligned? (who bears risk under the proposed terms, pricing structure vs. outcomes, exclusivity, skin in the game, side arrangements)
2. Is the capability real? (what they actually do, why they are better, what is differentiated vs. commodity)
3. Is performance repeatable? (who delivered the track record, under what conditions, case studies vs. one-offs, still the same team and process)
4. Are past failures explainable? (lost customers, outages, recalls, litigation, missed deadlines — what caused them, how they recovered, what changed after)
5. Is the organization stable? (key-person dependence, financial health, ownership, turnover, concentration in a few customers)

Working from sources

Use whatever the user has. Common inputs: company name, proposal or pitch deck, capabilities overview, completed questionnaire or RFP response, case studies, pricing sheet, draft contract, meeting notes, public website, company-registry and court filings, regulator databases, certifications, news, review sites, public bios and profiles, user notes.

Always lead with user-provided materials — they're the most relevant. Use public sources to fill gaps. Do not assume access to any specific database, subscription service, or private data room.

No-materials mode (name only)

If the user gives only a company name, don't stop — search public sources by default to build a lightweight profile. Useful public sources include the company website, business and corporate registries, public regulatory filings where the company is public or regulated, court records, certification registries, reputable news, review and employer-review sites, and public bios.

When operating in this mode, open the note with this exact framing so expectations are clear:

This is not diligence. This is a public-information starting point for deciding whether to take a meeting and what to ask next.

In no-materials mode, include: the lightweight public profile, a meeting-prep read, the Known/Unknown/Ask Next table, suggested diligence questions, a suggested materials request list, and sources reviewed. Do not infer revenue, headcount, customer counts, pricing, financial condition, or operational details unless they are publicly available from a reliable source — and cite it.

Tone and style

Write like an experienced procurement or corporate-development analyst note: neutral, direct, evidence-based, concise, practical, skeptical without being cynical. Memo style — short paragraphs, bullets and tables where they help. Avoid promotional language, generic consultant filler, and unsupported criticism.

The core discipline throughout: distinguish what the counterparty claims, what the evidence supports, and what still needs diligence. Marketing claims are not facts until verified.

Output length

Scale the note to the quality of available information — usefulness over completeness:

• Limited materials: concise 1–2 page note
• Rich materials: 2–4 page analyst note
• Meeting prep only: keep to ~1 page

Output structure

Use this structure unless the user asks otherwise. Omit or compress sections where there's genuinely nothing to say, but keep Team, Terms, and Track Record near the top — those drive the meeting decision.

# [Counterparty Name] — Counterparty Diligence (First Pass)
Relationship under consideration: [vendor / supplier / partner / customer / target / manager]

## 1. First Impression
Concise initial read: what the counterparty appears to do, whether it seems
worth a meeting on available info, what's interesting, what's unclear, the
biggest gaps. Do NOT recommend signing, buying, or investing.

## 2. Team and Organization
Founder and leadership background, key delivery people, team depth, relevant
prior experience, ownership, stability and turnover if known, key-person
considerations. Core question: is the capability tied to one or two people or
institutionalized?

## 3. Terms, Commitments and Alignment
If available: pricing model, contract length, minimums, termination and exit
rights, SLAs and remedies, exclusivity, liability caps, IP and data terms,
change-of-control provisions, who bears which risk, any side arrangements or
differing terms across customers. For a fund: fees, liquidity, and manager
commitment. Flag missing terms as a gap. Assess alignment only on available
info.

## 4. Track Record and Past Failures
Include ONLY if user-provided or publicly available from a reliable source.
Never estimate results. If present: outcomes delivered, named customers and
tenure, retention or churn, on-time delivery, incidents, outages, recalls,
litigation, lost accounts, recovery and what changed after. If absent, state:
"Track record was not available in the reviewed materials and remains a
primary diligence gap."

## 5. Capability and Differentiation
What they actually do, for whom, how it is delivered, what process or asset
makes it work, where it should work vs. struggle. Core question: is the
capability real, repeatable, and differentiated? Separate claim vs. evidence
vs. still-to-diligence.

## 6. Delivery, Risk and Capacity
If available: current capacity and utilization, customer concentration,
dependence on subcontractors, scaling constraints, business continuity,
security and compliance posture, financial health indicators, insurance.
Missing items go to the gaps.

## 7. Key Dependencies and Operational Snapshot
NOT a full operational audit. Pull only disclosed key facts: major
subcontractors, infrastructure and hosting providers, auditors, insurers,
certifications and their dates, key suppliers, largest customers, legal
counsel or compliance advisors where relevant. Flag missing items as gaps.
Do not speculate about operational quality, controls, or misconduct without
evidence.

## 8. Known / Unknown / Ask Next
Table with rows: Team, Terms/Commitments, Track Record, Capability,
Delivery/Risk, Capacity, Dependencies, Alignment.
Columns: What We Know | What We Don't Know | Ask Next.
Be explicit when something is not available. Do not confuse "not found" with
"not true."

## 9. Diligence Questions
Practical intro-meeting questions, grouped: Incentive Alignment; Capability &
Repeatability; Track Record & Failures; Organizational Stability; Delivery,
Risk & Capacity.

## 10. Reference Check Prep (if useful)
Grouped by reference type: Current Customers or Partners; Former Customers or
Partners; Former Employees; Suppliers and Service Providers.

## 11. Suggested Materials Request List
Tailored to what's missing. Prioritize: proposal or capabilities deck,
completed questionnaire, customer list with tenure, case studies with
verifiable outcomes, pricing and terms sheet, sample contract, SLA and
incident history, org chart and key bios, financial statements or proof of
financial standing, certifications and audit reports, insurance certificates,
subcontractor list, reference list, security and compliance summary.

## 12. Sources Reviewed
List sources with title, type, and date when available. E.g., "Company
registry extract, retrieved [date]"; "Firm website, accessed [date]";
"Capabilities deck, dated [date]"; "Court docket search, run [date]".

Diligence question bank (use/adapt these)

Incentive Alignment — How is pricing tied to outcomes, if at all? Who bears the cost when delivery slips or volumes change? Do any customers get different terms, and why? What happens to our data, IP, and continuity if the relationship ends or the company is acquired?

Capability & Repeatability — What specifically do you do that competitors cannot or will not? Which parts of the process are proprietary vs. standard? Which results came from your work vs. the customer's own conditions or a favorable environment? What has changed in your process, tooling, or market over the last three years?

Track Record & Failures — Which engagements or accounts have gone worst, and what explains them? Who were the last three customers to leave, and why? How were incidents, outages, or missed milestones communicated and resolved? What environments are hardest for you?

Organizational Stability — Who owns the work day to day, and who owns it if that person leaves? How are delivery staff compensated and retained? What turnover has occurred at senior and delivery levels? What share of revenue comes from your top three customers?

Delivery, Risk & Capacity — What is current utilization and realistic capacity for our volume? Which parts are subcontracted, and to whom? How is business continuity handled? Who are your key infrastructure providers and insurers? What certifications and audits are current, and when were they last renewed?

Reference-check question bank

Current customers or partners — Communication during difficult periods? Problems explained clearly and promptly? Delivery consistent with what was sold? Surprises on pricing, scope, staffing, or transparency?

Former customers or partners — Why did you leave? Issues with quality, responsiveness, pricing, trust? How were difficult conversations handled? Was the exit clean?

Former employees — Institutionalized vs. founder-driven? How are quality and delivery debates handled? Real culture? Concerns on staffing, controls, compliance, turnover?

Suppliers and service providers — How long have you worked together? Recurring operational or payment issues? Responsive and professional? Concerns on controls, reporting, or financial condition?

Language for missing information

Precision here is what keeps the note credible. Use careful, neutral phrasing:

• "Not available in the reviewed materials."
• "Not found in the reviewed public sources."
• "Not disclosed in the reviewed documents."
• "This remains a primary diligence gap."
• "This should be confirmed directly with the counterparty."
• "The available information is insufficient to assess this."

Avoid these unless evidence clearly supports them, because they assert facts you don't have: "The vendor does not have…", "This is a red flag…", "This proves…", "The offering is flawed…", "The company is not credible…"

What to avoid

The note loses its value the moment it overreaches. So:

• Don't recommend signing, buying, partnering, or investing (or recommend passing, unless the user explicitly asks for a screen).
• Don't invent results, or infer revenue, headcount, pricing, or financial condition without support.
• Don't treat marketing claims as facts, and don't treat lack of public information as negative evidence — absence of data is a gap, not a finding.
• Don't speculate about fraud, insolvency, or misconduct.
• Don't use stale information without flagging the date.
• Don't over-index on company size, and don't use numeric scoring.
• Don't use strong red-flag language unless the evidence clearly supports it.
• Don't compile personal information about individuals beyond their professional public footprint.

Quality checks before finalizing

Confirm the note: gives a clear first impression; helps the meeting decision; produces useful diligence questions; separates known from unknown; treats marketing claims as claims, not verified facts; includes track record only if provided or public and flags it as a primary gap when missing; keeps team, terms, and track record near the top; addresses all five core questions; names the relationship type under consideration; reads like a practitioner analyst note; and is proportional to the quality of available information.

Works well with

Run proposal-first-pass on the counterparty's proposal document before this note when one exists, questionnaire-red-flag-scanner on any completed questionnaire they returned, and feed the result into decision-memo-drafter when the diligence is far enough along to support a decision.