What should I check before buying a custom closet company?

A custom closet company designs, cuts and installs storage for homes. Some also build pantries, garages and home offices. Part of the business is a workshop and part is a sales operation, and a buyer needs to look at both. The question to keep in mind is simple: if the current owner stepped away tomorrow, would the designs still get sold, cut and installed?

The design and sales people

Ask who visits homes, who produces the drawings and who closes the sale. In many closet companies one or two people carry most of the sales. Meet them if the seller agrees, and ask whether they have agreements about confidentiality or non-competition, which your lawyer can explain. Check the design software and who holds the licences and the customer files.

Workshop equipment and suppliers

Get an equipment list covering the saws, edge-banding machines, boring equipment and dust collection, with ages and service records. Ask a tradesperson you trust to look at it if you are not familiar with it. Then review the panel and hardware suppliers, the credit terms and whether any account is in the seller’s personal name. Due diligence should confirm these.

Builders, homeowners and install crews

Revenue from home builders and from individual homeowners behaves differently. Builder work can be steady but may depend on one or two contacts; homeowner work depends on marketing and reputation. Ask for the split, and for the names behind the repeat work. Ask whether installers are employees or subcontractors and whether they intend to stay on.

Open contracts and deposits

List every signed job, its deposit and its stage: designed, cut or installed. Agree how unfinished jobs and deposits are handled at closing. Ask how the seller tracks job costs, since your own review of the margins depends on those records.