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Vendor Legal Entity
- What is the legal entity with whom we would be contracting with and where is this entity registered?
A company could be registered as a legal entity in US and it may be providing service in Japan. If a service provider is not registered in the same country, it has some implications in the payments, jurisdiction of the contract and regulatory procedures.
- Does the place of legal entity registration have any implications on lead times for contractual arrangements?
Some countries have the regulatory conditions, which need to be fulfilled at the time of making the contract as well as on each invoicing and disbursement.
- Where will be jurisdiction of the contract?
Jurisdiction of the contract can be in location, which could be the place of registration of customer and/OR service provider. This can be a favorable OR unfavorable factor. It’s always better to have the jurisdiction at a location where it is easier to get legal assistance and where the legal system is speedy and just.
- What is the form of legal entity?
The vendor can be a proprietorship, partnership, private limited OR public limited company. This factor does not have too much bearing on the decision, unless it is a strategic level project, and you may not like a proprietorship.
Vendor Shareholding Pattern
Shareholding pattern indicates the strategic direction, stability and quality of management.
- Shareholding pattern of Vendor Company?
Who are the key shareholders?
What is the level of participation from financial institutions?
Is there investment from companies, which could be having conflict of interests OR alignment of interests with the customer?
- Any recent change in the shareholding pattern?
If the company is undergoing a transition in terms of management control and membership to the board, it is wise to understand its impact, and you may like a clearer picture to emerge before you take a decision on the given Vendor.
- Any major divestment of shares?
This points to the instability and lack of shareholder trust.
- Any development in terms of merger OR acquisition?
This transient state OR expectation of a M&A needs to be studied and it may lead you to hurry OR postpone your decision.
Vendor Financial and business Information
- Financial/business performance track record.
The key element is the financial strength in terms of being able to support the product enhancements and also fulfill the terms of contract. Company should be able to sustain any internal OR external shocks. For Example many companies went bust, when internet bubble burst few years back.
- Share price movement.
This indicates the future outlook, and overall investor’s interest. It links to financial stability and capability of the vendor to effectively support and grow its products/services.
- Analyst reports and predictions.
Same as above- Analyst reports (don’t go only by what is shared by the vendor, but do your own gathering of reports from wide range of investment analysts) provides more detailed understanding of the future outlook and reasons behind it.
- Performance vis-a-vis competition
The comparison on various parameters on financial, business, market share etc. One can look at the current status, how it has moved over time and what is the future outlook.
PLEASE REFER VENDOR EVALUATION MATRIX to enable an effective Vendor Evaluation.
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