What should I check before buying an embroidery business?

An embroidery shop looks simple from the front counter: machines, thread, garments. What you are buying is less visible. It is a library of stitch files, a set of accounts that reorder, and the skill of the people who keep the machines running. Screen printing has its own list, covered in a separate page. These checks are specific to embroidery.

The machines and their history

Ask for the make, model and age of every multi-head machine, and the service records for each. Ask how many stitches the heads have run, if the owner tracks that, and what the busiest and quietest weeks look like. A good technician or the dealer can inspect them for you. Find out whether any machine is leased or financed, and ask the lender and your lawyer how any lease or loan carries over.

Digitized files and the digitizer

Each customer logo has to be converted into a stitch file. That library lets the shop re-run an order quickly. Ask who owns it, where it is stored, and whether it is backed up. Ask whether the shop digitizes in house or pays an outside digitizer, and what happens to that arrangement after the sale. A lawyer can confirm what the purchase agreement actually transfers.

Accounts, programs and suppliers

Look at which customers order again and again: schools, clubs, trades, corporate uniform programs. Ask whether those are formal programs or habits that depend on the owner’s relationship. Ask for the terms with the blank-garment suppliers, and whether any exclusive or credit arrangement ends on a change of ownership. Our page on screen-printing and T-shirt shops covers the overlap.