Why does a video production company’s gear rental income matter to a buyer?

Rental income shows how well the gear earns when it is not on a company shoot. For a buyer, the first job is to separate it from production income on the income statement. Ask for rental revenue by month, by item and by renter, then see whether it is steady or depends on a few repeat borrowers.

Next, consider what rentals cost. Equipment that is rented often gets more wear, needs more servicing and may need replacing sooner. Ask about damage claims, lost items and how the company handled disputes. Check whether rental agreements exist and who handles pickup, return and inspection.

Insurance is a big question. Ask whether the policy covers rented-out gear and how any claims were paid. Your insurance advisor and lawyer can tell you what a new owner would need. Also ask who manages rentals. If the owner personally handles them as favours for friends, that income may not carry on after a sale. If a staff member runs it with a booking system and written terms, it is easier to continue. Finally, check whether renting could ever compete with the company’s own production schedule, such as a camera being out when a client job needs it.

Key takeaways

• Split rental revenue from production revenue by month, item and renter.
• Ask how wear, damage and insurance claims on rented gear have been handled.
• Find out who runs rentals and whether it works without the owner’s personal contacts.