What should I check before buying a records storage business?

A records storage business holds boxes that belong to its clients, usually other businesses that need paper kept and found again on request. That is different from renting out self-storage units. The buyer takes over the service of keeping each box safe, finding it quickly and releasing or destroying it on instruction; ask your lawyer what duties come with that. The checks below follow that promise, from the paperwork to the building.

The storage agreements

Read a sample of the client agreements and then read every large one. Look at the retrieval and delivery terms, what a client pays to withdraw boxes permanently, how pricing can change, and whether the agreement can be assigned to a new owner without the client’s consent. Ask which accounts run on old forms and which have no signed agreement at all. Your lawyer can say what each clause means for you.

The box inventory and the index

The index is the product. Ask to see how boxes are logged, labelled and located, then pick a handful of index entries and walk to the shelf, and pick a handful of boxes and find them in the index. Gaps in either direction tell you how reliable the system is. Ask how lost or mislabelled boxes have been handled before.

Retention and destruction dates

Many clients set a date after which their boxes can be destroyed. Ask how those dates are recorded, who acts on them and what proof of instruction is kept. A backlog of boxes past their dates suggests the system is not being worked. What rules govern the records themselves is a question for your lawyer.

Clients, lease and building

• Client concentration: how much of the business rests on a few accounts, and how long each has stayed.
• The warehouse lease: its remaining term, renewal rights and whether the landlord must consent to a new owner.
• Racking: its condition, load limits and any inspection records.
• Fire protection: the system, its maintenance records and what the insurer requires.

Security and access logs deserve a look too, as does the insurance history. Our page on what to check about insurance history lists what to request.