What should I ask about a plumbing company’s service contract with property managers?
Ask for the signed contract and read how it ends, renews and is priced. Find out whether it can be passed to a new owner, who at the management company decides on vendors, and how much of the plumber’s revenue depends on it. Then speak with the property manager yourself, with the seller’s permission.
Property management work looks steady on paper, but the paper matters. Ask whether the agreement is a written contract or an informal habit of calling the same plumber. If it is written, check the term, the renewal wording, how either side can end it and whether pricing can change during the term.
The next question is transfer. Some contracts need the other party’s consent when the business changes hands, and some quietly depend on a personal relationship with the current owner. Your lawyer can tell you what the document allows. You can find out the practical side by asking the seller to introduce you to the person who actually books the work.
Review how the company is paid. Slow payment from a property manager can strain a small plumbing firm, so look at the receivables for those accounts. Also ask about emergency call-outs, after-hours expectations and any penalty for a late response, since those commitments fall on the new owner’s crew. Finally, ask whether any work is promised at fixed prices, because rising pipe and labour costs can quietly erode what looks like a steady account.
Key takeaways
- Read the term, renewal and termination wording yourself rather than accepting a summary.
- Ask your lawyer whether the contract can move to a new owner.
- Meet the property manager who books the work, with the seller’s consent.
- Check whether prices in the contract can change as costs rise.
Related reading
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Due diligence
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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 CanadaGovernmentMajor pitfalls to avoid when negotiating a purchase agreement
- 03Business Development Bank of CanadaGovernmentWhat are the steps to buying a business?
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