Buying a business

The problem

When you buy a business you also buy where it lives. A short lease, a landlord who won’t consent, or property issues can make a good business worth a lot less, and you might not find out until after you’ve paid.

What I do about it

I check the real estate side before you commit: the term left, renewal options, the assignment clause, the rent, and the property if it’s included. Then I deal with the landlord to get consent and the term you need.

What the seller and landlord want

The seller wants a fair price and a buyer who can actually close. The landlord wants to know the new owner can run the business and pay the rent.

Where everybody wins

A buyer who arrives prepared, with a clear plan for the landlord, makes the seller comfortable and the landlord confident. That’s how deals close on time.

Check where the business lives

When you buy a business, you’re also buying where it lives. Either the business owns its property, or it has a lease. Both need checking:

• If there’s a lease: how many years are left, renewal options, rent and additional rent, the assignment clause, and whether the landlord will consent to you. A great business on a short lease is worth a lot less.
• If there’s property: whether it’s included or separate, its value on its own, and the zoning for the current use.

Assets or shares

Buying the assets means you pick what you take on, and the lease gets assigned. Buying the shares means you buy the company, with its history, contracts and liabilities. If the company owns real estate, a share purchase usually doesn’t trigger Property Transfer Tax, which is one reason sellers prefer it.

Read PTT and share sales and talk to your lawyer and accountant early. That decision is theirs and yours, not mine.

What I do as your agent

I help you find businesses that fit your criteria, including approaching owners who may sell but haven’t listed. I review the lease or property, deal with the landlord on assignment and any new terms, and keep the real estate side moving with your lawyer, accountant and lender.

Buying only part of a company’s shares is treated as a securities matter, and your lawyer will guide that part.

Questions people ask

Should I buy the assets or the shares of a business?

It depends on taxes, liabilities, contracts and the real estate involved. Share purchases can save Property Transfer Tax where the company owns land, but you take on the company’s history. Get advice from a lawyer and an accountant before you decide.