What should I check in a co-packer’s customer contracts before buying it?

A co-packer owns no brands. What it has is the work that other brands give it, so the customer agreements are close to the whole business. A plant can look full and profitable on paper and still depend on a handshake with one buyer. Before you commit, read the agreements, lay the revenue out customer by customer and test what you read against what the owner tells you.

See how concentrated the work is

Ask for revenue by customer for the last few years. If most of it comes from one or two brands, the loss of either would change the business you are buying. Look at how long each customer has stayed and how they were found. Ask your accountant what the spread of customers across product types means for you.

Term, renewal and minimums

Check how long each agreement runs, how it renews and how either side can end it. Many co-packing relationships run on purchase orders with no written term at all, and that is worth knowing early. Look for minimum runs, volume commitments, pricing adjustments when ingredient or material costs move, and what happens if the customer orders less than promised.

Tooling, stock and ownership of things

Find out who owns the moulds, plates, labels, packaging stock and any customer-specific equipment on the floor. Ask where customer-owned inventory is held and how it is counted. Confirm what the plant owes a customer if it closes a line. Disputes over these items are common at a handover, so get the answers in writing.

Change of owner and customer calls

Whether an agreement can be assigned to you, or lets the customer leave when the owner changes, is a legal question for your lawyer, who will read the exact wording. Beyond the paper, ask the seller to arrange calls with the largest customers before closing. What they say about quality, delivery and the owner tells you more than any clause. For the brand side of this question, see whether a co-packer contract transfers with a food brand.