How do I check a business’s supplier relationships?

Buyers spend most of their attention on customers, but a business can be just as exposed on the supply side. A single supplier providing critical goods on favourable terms is a relationship, not an asset, and relationships do not automatically survive a change of ownership.

Map the concentration

Break down cost of goods sold or key inputs by supplier for at least the last year or two. A business sourcing a large share of what it sells or uses from one supplier carries real exposure if that relationship does not transfer smoothly, or if pricing changes once the founder who built the relationship is no longer involved.

Read the actual agreements

• Whether supply terms are in writing, or rest on an informal understanding with the current owner
• Any anti-assignment clause that would require supplier consent before the agreement transfers
• Pricing terms, minimum purchase commitments and exclusivity obligations in either direction
• Personal guarantees the current owner has given on supplier credit accounts

Test whether alternatives exist

Ask what it would take to replace the current supplier on similar terms — pricing, lead time, minimum order size, quality. A business with genuine alternatives available is far less exposed than one where a single supplier is effectively irreplaceable, even if that has never actually been tested.

What to do before closing

Where a key supply relationship rests on personal rapport rather than a written contract, ask the seller to introduce you before closing and be direct about the transition. A supplier who values the relationship, not just the account, is more likely to keep terms roughly consistent once ownership actually changes.