How do I check how much a language school relies on a few corporate clients?
Ask for revenue by client for each of the last several periods, then see what share the largest few represent. Read their contracts for termination terms, renewal dates and who signed. If most income rests on a handful of companies, the school’s stability depends on relationships that may not transfer to you.
Start with a client-by-client revenue table, covering company contracts separately from individual students. Look at the order of the list, not only the total. If one name leads by a wide margin, ask how that relationship began, who manages it, and whether the buyer-side contact is the owner personally. Relationships held by the owner alone are the hardest to carry across a sale.
Next, read the contracts. Check term, renewal, notice for ending the arrangement, and whether any clause is triggered by a change of ownership. Ask whether the client trains its staff on a fixed budget that could be cut, and whether the school has ever lost a corporate client and why. Compare the invoices with the contracts to confirm the work is actually being billed as described.
Finally, ask the seller to introduce you to the main clients, ideally before closing and with their consent. A short call tells you whether they plan to continue, what they like, and what they have considered elsewhere. Also look at how many instructors serve each client, since a favourite teacher can matter as much as the contract.
Key takeaways
- Request revenue by client and see how much the largest few contribute to the total.
- Read each contract for notice, renewal and change-of-ownership wording before relying on the income.
- Ask to speak with the main clients, with their consent, before you commit.
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Due diligence
Sources
This answer is checked against primary sources. Links were last confirmed on the dates shown.
- 01Business Development Bank of CanadaGovernmentHow to conduct due diligence when buying a business
- 02Business Development Bank of CanadaGovernmentWhat are the steps to buying a business?
- 03Business Development Bank of CanadaGovernmentAfter buying a business, what is the next step?
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