What should I check before buying a copier and office equipment dealer?
Before buying a copier or office equipment dealer, check the client service and supply contracts, who holds the equipment leases, the manufacturer dealer agreement and whether it continues for a new owner, the technicians, and the parts and toner stock. Ask the manufacturer and your lawyer about anything that needs consent.
A copier dealer sells, leases and services machines for offices, and much of its income may come from ongoing service and supply arrangements rather than the first sale. That shapes what you review. You are buying a base of client relationships, a service team and a manufacturer connection, as much as you are buying machines in a warehouse. Look at each of those separately.
Service contracts and who holds the leases
Ask for the service and supply agreements with clients and read how each can end and whether it can be assigned to a new owner. Then find out who holds the equipment leases. Some dealers lease machines to clients directly. Others sell the machine to a third-party lessor and keep only the service work. The difference changes what you inherit, so ask your lawyer to review the lease paperwork.
The manufacturer dealer agreement
Most dealers sell under an authorization from one or more manufacturers, with a defined territory. Ask for the agreement and ask the manufacturer, in writing, whether the authorization continues after a change of owner and on what conditions. Do not assume it moves with the business. If the lines are what clients buy, this is the first thing to confirm, and your lawyer can tell you what consent is needed.
Technicians, parts and the machines in the field
Service income depends on the people who do the work. Ask how many technicians there are, what manufacturer training and certifications they hold, and how long they have stayed. Check the parts and toner stock for age and condition, and ask how the fleet of machines in clients’ offices is tracked, including how old they are and when each contract is next due.
A short list to bring to the first meeting
These questions help you see the business quickly.
- Which clients make up most of the service work, and who manages each relationship?
- Are any contracts month to month, or due for renewal soon?
- Does the dealer or a third party hold the leases on client machines?
- What happens to the dealer authorization if the owner changes?
- Who are the technicians, and are any planning to leave?
Related reading
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Sources
This answer is checked against primary sources. Links were last confirmed on the dates shown.
- 01Business Development Bank of CanadaGovernmentWhat are the steps to buying a business?
- 02Business Development Bank of CanadaGovernmentHow to conduct due diligence when buying a business
- 03Business Development Bank of CanadaGovernmentWhat is inventory
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