How do I review a hosting company’s relationship with its data centre landlord?
Read the lease or colocation agreement and the payment record, then talk to the landlord if the seller agrees. Check the term, rent changes, power and space limits, whether the contract can pass to a new owner, and whether there is any dispute. The hosting business depends on this one relationship.
Start with the agreement. Ask for the lease or space contract, every amendment and the side letters. Note when it ends, how renewal works, how rent and power charges can change, and what happens if the company needs more room. Look at the limits on power and cooling, because growth can hit those before it hits the rent.
Check the track record. Ask for payment history, any late notices, disputes over charges and any incidents caused by the building, such as power or cooling failures. A landlord who has been patient with late payments may not stay patient with a new owner. Ask about deposits and who holds them.
Then address the change of owner. Ask whether the landlord must approve it, whether terms may be reopened, and who in the landlord’s office knows the company. With the seller’s consent, have a conversation with the landlord before closing. Ask your lawyer to read the agreement for assignment, access, and what happens to equipment if the relationship ends. Also find out how quickly the equipment could move elsewhere, since that is the true measure of dependence. Ask what the landlord has said about the company in recent years.
Key takeaways
- Read the full agreement, including amendments and side letters.
- Check power and space limits against growth plans.
- Ask what the landlord must approve on a change of owner.
- Find out how fast equipment could move elsewhere.
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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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