Your Best Customer, Your Key Vendor, and Your Landlord Walk Into Due Diligence

Written by James Sanders

Nothing tests the value of a business quite like learning that its biggest customer, sole-source vendor, or landlord has a different plan.  Last time, we asked whether your business is an asset or simply you with a laptop and a lot of stress.

This week’s question is more specific:

If a buyer, lender, successor, or new partner looked at your key customer, vendor, and lease relationships, would they see durable value—or a collection of relationships that could disappear with one awkward phone call?

A few practical questions are worth asking now:

• Key customers: Are the most important customer relationships governed by written agreements? Do those agreements clearly address pricing, term, renewal, scope of work, payment obligations, confidentiality, termination rights, and who owns the work product or customer data?
• Key vendors and suppliers: Could the business continue operating if a principal vendor changed terms, had a supply interruption, or simply stopped answering the phone? Are pricing, exclusivity, minimum-purchase commitments, and delivery expectations documented?
• Your lease: Does the company have a clear right to occupy its space for as long as it needs it? If the business is sold, can the lease be assigned—or will the landlord’s consent be required? Are there renewal options, personal guarantees, relocation rights, or maintenance obligations that should be reviewed before they become a surprise?
• Change of control: Some contracts permit termination, require consent, or trigger other consequences if ownership changes. That is not necessarily a problem—but it is much better to know before a transaction, refinancing, or succession plan is underway.

Written agreements do more than prevent disagreements. They help preserve recurring revenue, clarify operating expectations, reduce dependency on a particular owner, and make the company easier for a buyer, lender, or successor to understand.

The goal is not to turn every relationship into a 40-page legal document. It is to make sure the relationships that truly drive the business are documented clearly enough that the business can keep moving—even when the owner is not the person making every call.

Because “we have always done business on a handshake” is a fine story—right up until someone else is trying to value the handshake.