How do I check a scrap yard’s supplier base of contractors and walk-in sellers?

Request the purchase records and group them. Contractors who bring loads from demolition and renovation jobs behave differently from the individuals who turn up with a trunk full of metal. Look at how many suppliers account for most of the tonnage, and how long the biggest have been coming. Do not rely on the owner’s memory. Ask for the ledger.

Then ask why they come. Is it price, convenience, payment speed, the owner’s friendship, or a lack of choice nearby? If the owner buys by phone from a handful of contractors at personal rates, you are buying relationships you may not inherit. Ask for introductions to the major ones before closing, if the seller agrees.

Walk-in traffic needs a different check. Look at how identity is recorded, how cash is handled and what the yard does about suspicious material. Ask whether police have ever made enquiries, and check records are kept in a form your lawyer can review. Strong controls protect the yard’s reputation, and weak ones are a risk you take over. Finally, compare the yard’s buying behaviour with its neighbours. If the owner pays above the going rate to keep volume, margins may be thinner than the profit line suggests, and a new owner may not want to keep that up.

Key takeaways

• Split purchases into contractors, regular accounts and walk-ins.
• Find out whether suppliers are loyal to the yard or to the owner.
• Review how seller identity and cash payments are recorded.