What should I check about the ownership of coolers placed at customers' offices?
Ask for a list of every cooler, with its location, serial number and proof of who owns it. Some may be owned outright, some financed, some leased and some supplied by a bottler. Match the list against what you see on site, because equipment out in the field is easy to lose track of.
A cooler in a customer’s office is easy to count as an asset and hard to pin down. Begin with the seller’s own records: purchase invoices, loan or lease contracts and any paperwork from a supplier who placed units on the business’s behalf. If a unit has a lien or lender interest attached, your lawyer can search for it.
Next, check what customers have signed. Some agreements say the cooler stays the property of the business, others are silent, and a few customers may believe they bought theirs. Ask how missing or damaged units have been handled in the past. Then verify the units physically. Choose a sample of locations along the route, photograph serial numbers and compare them to the list. Note units that look aged, leak, or no longer have an active customer attached.
Finally, ask how the cooler count appears in the books. If depreciation or financing balances look odd against what exists, raise it with your accountant before you agree to include the equipment in the sale.
Key takeaways
- Get a unit-by-unit list with serial numbers and proof of ownership.
- Read customer agreements and any lease or loan documents that touch the equipment.
- Sample real locations to confirm the units exist and are in service.
- Photograph serial numbers at a sample of customer sites and compare them with the seller’s list before agreeing what the sale includes.
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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?
- 03Business Development Bank of CanadaGovernmentAfter buying a business, what is the next step?
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