Why does a managed IT firm’s vendor reseller relationships matter to a buyer?
Vendor and reseller relationships often sit behind the firm’s margins, support and ability to quote. Some depend on the owner personally or on a status that may not transfer. A buyer should ask which agreements exist, who they are in the name of, and what happens to them when the business changes hands.
Ask for a list of every vendor the firm resells or relies on: hardware, licences, cloud services, security tools and distributors. For each, note whether the agreement is in the company’s name, the owner’s name or a technician’s. Anything held personally needs a plan.
Next, find out what the relationship gives the firm. It may be better pricing, access to support lines, or leads from the vendor. Ask whether those benefits depend on staying at a certain level, on certified staff, or on the owner. If two technicians hold the credentials and one leaves, the status may be at risk. Ask too about money owed in either direction, such as unpaid vendor invoices or credits the firm holds. Your accountant can tell you how those balances should be handled at closing.
Ask whether the vendor must approve a change of owner. Your lawyer should read these agreements and tell you what consent is needed. Then contact the key vendors, with the seller’s agreement, to hear in their own words whether the arrangement continues. Also consider concentration. If most client revenue runs through one vendor, a change in that vendor’s terms could reach you quickly. A buyer’s plan should include what happens if that vendor changes course.
Key takeaways
- List each vendor and confirm whose name the agreement is in.
- Ask whether pricing or status depends on the owner or on certified staff.
- Have your lawyer check whether the vendor must consent to a new owner.
Related reading
15 pages on the same subject, grouped by topic.
Due diligence
- Expert answerHow should I review a property management firm’s maintenance vendor relationships?
- Expert answerHow do I check a managed IT provider’s reliance on one software vendor?
- Expert answerWhy does an architecture firm’s pipeline of slow-moving projects matter to a buyer?
- Expert answerHow can I tell if an accounting firm’s work depends on one senior partner’s relationships?
- Expert answerWhy do payroll service client onboarding notes matter during a purchase?
- GuideIT consulting firm / MSP due diligence
Buying
- Expert answerHow do I find out which engineers carry an engineering firm’s client relationships?
- GuideBuying an IT consulting firm / MSP in Canada
- Expert answerWhy does a video production company’s gear rental income matter to a buyer?
- Expert answerHow do I check a software reseller’s relationships with its vendors before buying?
- Expert answerWhat should I ask about a managed security firm’s monitoring contracts?
- Expert answerHow do I find out if a software reseller’s customers would switch vendors?
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?
Deavo is an advertising and listings platform, not a brokerage, law firm or valuation firm. This page is general information, not legal, tax, accounting or valuation advice, and rules differ by province. Confirm anything you rely on with a qualified professional before you act on it.