What should I look at in an IT training business’s corporate client contracts?
Read each corporate contract for term, scope, pricing, cancellation rights and consent on a change of ownership. Then check how much revenue sits with a few clients and who personally manages them. A contract is only as stable as the relationship behind it.
Collect every corporate agreement and build a simple table: client, service, start and end, pricing basis, and notice needed to cancel. Look for clauses that let the client walk away easily, require approval of a new owner, or tie delivery to a named instructor. Ask your lawyer to read assignment and liability wording closely.
Next, look at concentration. If a small number of clients provide much of the income, find out how long they have been with the school and how they are served. Ask whether the work is renewed by tender, by habit or by the owner’s friendship. Request invoices and payment history to see whether clients pay on time or hold payments back.
Finally, meet the people involved. With the seller’s permission, speak with a few clients about quality, instructors and what they would change. Learn who within the school sells and manages the account, and whether that person is staying. Ask about custom courses, because a client may own the content built for them. Also note whether prices were set long ago and never reviewed. A loyal client on old pricing is not necessarily a problem, but a buyer should know the real margin before assuming the income will look the same next year.
Key takeaways
- Tabulate every contract’s term, pricing basis and cancellation terms.
- Find out how much of the income rests on a few clients.
- Ask who owns custom content built for a corporate client.
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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?
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