Do medical supply store suppliers keep giving the same terms to a new owner?

Start by listing the suppliers who matter most and the terms each one gives: price levels, credit limits, payment timing, minimum orders, exclusive lines and return rights. Ask the seller which of those depend on a signed agreement and which rest on goodwill. The goodwill ones are the easiest to lose.

Then ask how each supplier would see you. A new owner with little track record may face a credit review, a smaller limit or a deposit. Ask the seller to introduce you, and request a plain statement from the supplier about what will change. If the seller has personal guarantees in place, ask how those will be replaced.

Finally, build contingency into your plan. Find alternative sources for key products, and check how much you would pay if terms tightened. Your accountant can test cash needs under tougher terms, and your lawyer can add closing conditions covering supplier consents. Also check whether any lease or other contract is linked to supplier arrangements. Be careful about contacting suppliers too early, since the seller may not want the sale known. Ask the seller to choose the timing.

Key takeaways

• Separate supplier terms in a signed agreement from those based on goodwill.
• Meet the major suppliers before closing and get their position in writing.
• Plan for tighter credit and test your cash needs under it.
• Let the seller choose when suppliers are contacted, to protect confidentiality.