Before buying a business, review its customer relationships, supplier agreements and reliance on key commercial partners. These relationships directly affect revenue, operating costs and business continuity. Buyers should establish whether important contracts will remain in place following an acquisition and identify any dependencies that could create financial or operational risks.
Focus on three key areas:
- Customer relationships: Review customer retention, recurring revenue, contract terms and the percentage of income generated by major customers. Consider whether relationships depend heavily on the current owner.
- Supplier agreements: Examine supplier contracts, pricing arrangements, payment terms and any exclusivity agreements. Establish whether alternative suppliers are available if existing relationships change.
- Contract continuity: Check whether customer and supplier agreements contain change-of-control provisions or require consent before ownership changes.
For example, a business that relies on one supplier for essential products may face significant disruption if that supplier increases prices or terminates its agreement following the acquisition.
Reviewing these relationships during due diligence can help identify potential risks and determine whether additional contractual protections are required.
Read more: Due Diligence Checklist for Buying a Business
Ready to explore businesses for sale? Create your Valius account and browse verified UK opportunities.
