Sizing Up the Company on the Other End of the Deal
Smart negotiations start with knowing who's on the other side of the discussions. Only then can you understand their real interests and how much value you could potentially deliver to them—and what they might be willing to pay in exchange.
Take Apple's recent trademark snafu.
A Chinese company called Proview claimed that it owned the iPad trademark in China. Fortunately for Apple, a Chinese court didn't agree, so the company can continue to sell iPads in Shanghai.
Apple claimed that it had bought the rights in 2009 and that Proview has gone back on a valid deal. The court has said that technicalities kept the purchase from being legal. But there's an interesting twist: Apple made the deal through a shell company it owned.
Now maybe Proview knew that Apple was behind the attempted trademark purchase. But it's conceivable that a behemoth would try to mask its identity to give the impression of a smaller firm with fewer resources.
Could you be caught in a similar situation? Here are some ways to check whether a company seems on the up and up, or if it might be a front for someone else.
Check out their domain name
Most companies today have some presence on the Internet—if not a website, then at least an email address. If company representatives can't send an email from their corporate site, it could be a sign that either the company is tiny or that it is trying to hide its true identity.
Get someone to email from the company's own domain (say that it helps you verify the corporate identity) and then do a whois search on the domain name (the part after the @ sign) at Internic.net. That will tell you when the domain was created and last updated. If the domain is fairly new while the company claims to be older, be wary.
Follow the Web trail
Any legitimate company should show some signs of existence. It might be a mention in a news story, a press release, or announcement of a deal. At the very least, using the company name and the address of its headquarters should return something from business listings or telephone directories.
Check patent and trademark listings
Companies doing business in the U.S. are likely to have trademarks or patents. The U.S. Patent and Trademark Office has a website where you can search for patent and trademark applications by company. (For a patent, set the assignee name to the company; for a trademark, use the owner name field.) Very small businesses might not have anything listed, but a company with the resources to make a significant deal is likely to have something on file.
Look at the incorporation listings
In the U.S., corporations have to be registered. Chances are they're either registered in the state of their headquarters or in Delaware. Go to the appropriate secretary of state's office and do a search. Again, you don't necessarily need a lot of the potential detail. But look for when the company was incorporated and name of the official contact. If the company is new, consider that it might have been created for a specific purpose of negotiation. And do a search on the person's name (maybe combined with the home state of the corporation) to see what affiliations might pop up.
No one of these methods is sure proof of anything. But if you find that a company seems to have appeared from nowhere, it might be a sign that someone is trying to create a front that will make you comfortable.
ERIK SHERMAN | Columnist
Erik Sherman's work has appeared in such publications as The Wall Street Journal, The New York Times Magazine, and Fortune. He also blogs for CBS MoneyWatch.