What should I check before buying a ready-mix concrete plant?

A ready-mix plant is a machine business. The owner sells a product that cannot wait, made from materials that must arrive on time and delivered in trucks that must run. Most of what you are buying is physical, so most of your checking should be physical too. The general steps in our answer on fixed-asset manufacturers still apply. These are the ones that matter most here.

The plant and the trucks

Walk the plant with someone who knows batching equipment. Ask for maintenance logs, the repair history of the mixers and trucks, and a list of what is leased or financed. Look at wear on the drums, the scales and the controls. Ask what has been put off. A tidy yard and good records usually tell you how the owner has run everything else.

Supply of cement and aggregate

Ask where the cement and aggregate come from, whether supply is under written agreement, and what would happen if a supplier changed terms. Find out whether the plant owns or leases a pit, and whether any of the supply depends on a personal relationship with the owner. A plant with one supplier has less room to move.

Customers, credit and seasons

List the contractor accounts and see how much of the work sits with a few of them. Ask how long they take to pay, whether any are overdue, and how the plant handles a contractor who stops paying. Look at the order book through a full year, since weather and building cycles shape the work.

Questions to leave to your advisors

• Environmental and operating permits, and whether they transfer to a new owner.
• The condition of the land, and any past contamination.
• Whether to buy assets or shares, and what liabilities come with each.
• How a lender will treat the equipment as security.