What should I ask about an RV shop’s dependence on a few dealerships for overflow work?
Ask which dealerships send work, how much each sends, and whether any agreement exists in writing. Then ask how those jobs are priced and paid, and what happens if a dealer brings its service in-house. A handful of senders is a concentration risk, even when the relationships are warm.
Start with a list of dealerships by the work they referred over the last full year, shown by both job count and revenue. See whether one name dominates. Ask how long each relationship has lasted, who at the shop manages it and whether that person is staying after the sale.
Then ask how the work arrives. Is it a standing arrangement or favours when the dealer is busy? Ask how the shop is paid, how quickly, and whether the dealer sets the labour rate. Late payers and tight rates both hurt, so look at the oldest unpaid invoices.
Consider also why the dealers send it. They may lack bays or technicians, and that may change if they expand. Ask whether any have hired more staff or built larger shops. Finally, ask to meet the main dealers with the seller before you commit. A warm introduction before closing is worth more than a promise afterward. Your lawyer can advise on any written terms. Ask the seller what the shop would do if the largest sender stopped tomorrow. A calm, specific answer, with other sources of work in view, suggests the owner has thought about the risk before you raised it.
Key takeaways
- Rank dealerships by jobs and revenue sent over the last full year.
- Ask how the work is priced and how fast each dealer pays.
- Meet the main dealers with the seller before you commit.
Related reading
15 pages on the same subject, grouped by topic.
Due diligence
- Expert answerHow do I check an auto repair shop’s comebacks and warranty work?
- Expert answerHow do I judge a surveying firm’s dependence on a few developers and builders?
- GuideAuto body and collision repair shop due diligence
- GuideAuto glass repair and replacement shop due diligence
- GuideDue diligence on a franchised auto repair shop
- GuideDue diligence on a heavy truck and trailer repair shop
- Expert answerHow can I tell if a repair garage’s shop software data is complete and usable?
- Expert answerHow do I check an auto repair shop’s job records before buying?
- Expert answerHow do I check an auto repair shop’s lifts and diagnostic tools before buying?
- Expert answerHow do I review a body shop’s average repair cycle time before I buy?
- GuideDue diligence on an independent auto repair shop
- Expert answerWhat should I ask about fleet accounts when buying an auto repair shop?
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?
- 03Business Development Bank of CanadaGovernmentMajor pitfalls to avoid when negotiating a purchase agreement
Deavo is an advertising and listings platform, not a brokerage, law firm or valuation firm. This page is general information, not legal, tax, accounting or valuation advice, and rules differ by province. Confirm anything you rely on with a qualified professional before you act on it.