Pricing a Business Can Be Impacted By Your Landlord

Pricing a business can be impacted by your landlord.

Pricing a Business;
Limiting Landlord
Involvement

 There are many factors for pricing a business, did you think of this one?

Boat owners have a saying “the 2 happiest days of your life is when you buy a boat, and when you sell your boat”!

Trust me when I say this is the case for owning businesses too.

But what if you thought you sold your business only to have your landlord nix the deal.

I, personally, would be a tad upset.

Is it possible for the landlord to stop your sale?  The answer is, it depends.  Did you protect yourself against this when you signed the lease to begin with?

You see that is the time to deal with the issue, long before that buyer crawls out of the woodwork.

There are two issues the landlord will have.  The first is if the buyer wants to operate the business from the same location you will need to sub-lease your commercial space to them.

Did you get prior permission from thelandlord to sub-let?  Good for you if you did.

Did you nail down the terms under which the landlord could deny your sub-lease?

The second issue has to do with timing of the commercial lease expiration and the sale itself.

You are not the only one who starts seeing dollar signs when a buyer shows up,

the landlord starts licking their chops too.

This is their opportunity to renew that lease at a higher rental rate and attach more expenses to that buyer.

Pricing a business includes the value of the current location.

Pricing a Business
Value of Location

The best case scenario is that you did include a commercial sublease clause in the original lease.

The terms and conditions are spelled out and clearly understood by both parties, and finally the sale takes place when you have lots of years left on the lease.

The value of your business most often hinges on the location and traffic for that business.

The buyer does not want to take the chance of moving to another untested location.

Think of the additional risk they take on, it’s like starting the business all over again.

How do you deal with this?  Most importantly don’t go running to the landlord first to check with them.

Instead run to a professional, an attorney, commercial real estate broker, or a business broker.

The most important thing is to get the purchase agreement for the business signed with terms agreed to.

Emotionally and legally get the buyer committed to an outcome, closing the sale.

Let’s say you check with the landlord during the initial requests for information by the buyer and the landlord starts making noises about raising rent or expenses.

This could easily spook the buyer.

When it comes time to approach the landlord it might be better to have the professional and you meet with the owner.

The professional knows the language of the landlord and understands the important issues that impact the owner.

The main take away when you consider selling the business is that your commercial lease will play a major roll.

Not only will your location help sell the business, it will actually increase the value of the business, if done correctly.

Subscribe to this website

Steve Freeman - Great Business Content

Steve Freeman – Great Business Content

Great Business Content supplies information resources to small business owners pertaining to all aspects of starting and running a small business.  View video interviews of small business owners and learning interviews with professionals from Attorneys to Web designers.

Read More;

Commercial Lease Security Deposits – Ouch, Damn That Hurts!

Capital Improvements Can Kill Your Business – Commercial Leases

Commercial Lease Rates – Is Your Budget Real? 7 Things to Learn

 

 

Show/Hide Comments Quick Comment

Comments are closed.

Leave a Comment