How do I find out how many copier leases are tied to third-party finance companies?
Ask for a schedule of every customer lease showing who owns the lease, who owns the machine, the end date and any dealer guarantee. Then ask for the finance companies’ statements to confirm it, and have your lawyer read how each arrangement treats a change in dealer ownership.
A copier dealer often sells a machine and the lease is written by an outside finance company. In that case the dealer was paid up front, and the customer pays the finance company. That changes what you are buying: the dealer may have little ongoing lease revenue, but it may still owe service, supplies or a guarantee.
Ask for the schedule and test it. Compare it against the finance companies’ statements and the dealer’s own books. Look for leases the dealer must buy back, recourse arrangements, holdbacks and reserve accounts that the finance company keeps from payments.
Learn what happens at the end of each lease. Does the customer renew with the same dealer, return the machine or buy it? A dealer who keeps winning renewals is in a stronger position than one who loses customers to the finance company’s own offers. Check whether the dealer’s arrangement with each finance company can continue under a new owner, and whether the company needs to approve you first. Ask the finance companies directly, with the seller’s consent. Keep the finance companies’ names and contacts in one list, so you can follow up on every lease.
Key takeaways
- Get a schedule showing lease owner, machine owner, end dates and any guarantee.
- Look for buyback, recourse and holdback terms with each finance company.
- Find out who wins the renewals when leases end.
- Ask each finance company whether the arrangement continues for a new owner.
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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?
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