Buying A Business? Commercial Lease 101



You’ve found a great business and are excited to start negotiations with the sellers – but here’s a thought you may not have considered. That’s not the only negotiating you’re going to have to do.

 

When you buy an existing business, you typically are not buying the physical space that the business occupies.

 

Most businesses come with a lease, and that lease comes with a landlord and/or property manager.

 

 

Most landlords accommodate transfers easily, but not all do. Deals can get hung up on the lease when the landlord refuses to grant the transfer or has decided to change the lease terms dramatically. They can also get hung up if you don’t start working on the transfer until the last minute. 

 

The most important thing you can do as a buyer is get your hands on a copy of the current lease as soon as possible, and then deal with any lease issues long before the day you are supposed to close your deal.

 

Once you have the lease, the language you would typically want to see is in the section of the lease that has to do with transfers or assignments of the lease. Does it say something along the lines of “any assignment will not be unreasonably withheld”? If it does, you are probably in good shape. This type of language means the landlord would have to come up with a very good reason to keep from transferring the lease to you.

 

Landlords, for the most part, are concerned with keeping a rental space filled and generating rental income. Some, however, are unwilling to reassign leases (at least initially).

 

This is a part of the business sale process where your business broker will be an invaluable asset. They can act as a buffer between you and a difficult landlord, and can help to negotiate your new lease or the reassignment of the old lease to keep the lease rates reasonable.

 

Another way to keep the lease from holding up your closing is to be forthcoming with your financial information when the landlord asks for it. Most landlords are going to want to see some kind of financial statement that proves you have the capital to keep the business open. It would be foolish for them to rent to a tenant who will be forced to close the business doors only a third of the way through the lease. Some landlords also want to see some kind of resume or work history to show you have the experience necessary to keep the business running and profitable.

 

You should also be aware that in some cases the rental rate will slightly increase from what the seller is currently paying when you get a new lease. You can negotiate a lease extension at the same rate, but eventually your new lease may come with a new rental rate. You will also be responsible for coming up with the deposits necessary for the lease.

 

The message here is your business won’t be much of a business if you can’t get a lease assigned to you for the space. Deal with lease issues early on and the won’t become a big headache in the end.

 

Are you a business buyer who has questions about business leases? Have you had a deal fall apart because of a difficult landlord? Please feel free to leave us a comment or question here, and we will be happy to assist you with any lease questions.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
5111 Ocean Boulevard, Suite E
Siesta Key, FL 34242

www.InfinityBusinessBrokers.com


Business Sellers: Why It Pays To Be Nice To The Buyer



It can be very difficult to sell your business. It’s a place that’s been your home away from home. You’ve put in your time, your energy and your money and now the time has come to pass on the reins to someone else. If you are selling your business and that person will be a stranger, it can sometimes be very difficult to let go and walk away.

 

Mental preparation is an aspect of the business sale process that most sellers don’t consider – but it can be crucial to getting a deal done. 

 

Why do I need to mentally prepare?

 

Most entrepreneurs and business owners have strong personalities. The type of person who can successfully own and operate a business is a person who has the drive and passion to succeed. As a business owner, you know what it takes. Guess what? Business buyers are entrepreneurs too. They will probably have a strong personality as well. It can sometimes be very difficult to work out a complex deal when the personalities on both sides are equally tough.

 

It can be tempting to let personal clashes between you and a potential buyer escalate – but keep reminding yourself that it will make it easier for you in the long run if you do your best to maintain a positive relationship with a business buyer.

 

 

What if I don’t like the buyer? Why do I have to be nice?

 

It can take a long time to get a business from initial offer all the way through to closing. Think weeks and months, not days. You also need to tack on a training period that will happen after closing, so you will probably have to work with this person for an extended period of time. Another thought? Once the transaction is over, the business brokers are no longer going to be there to act as a buffer. The one-on-one time with your buyer can be excruciating if you aren’t getting along – so it is in everyone’s best interest to keep the relationship amicable.

 

What if I don’t want to stay on and train them?

 

There are very few business transactions that don’t include a training period. The good news is most training periods are only a couple of weeks. It would be foolish for someone to walk in on day one and try to take over without knowing how the business is run. If you have employees or clients, you owe it to them to get the new owner up to speed before you walk away. It can be tough if you and the buyer aren’t on the best of terms, but the transition for your staff and clientele will be far less stressful if it appears that the relationship between you and the buyer is good. So for yourself, the future of the business and the sake of your staff be as nice as possible to the business buyer.

 

How can you stay focused on being nice?

 

Keep reminding yourself why you are selling. Whatever life will look like for you after the sale, keep focusing on that goal. Your time with the business buyer is short – and you can weather the storm. 

 

Are you considering selling your business and are worried about having to hand over the reins? Would you like to know more about how a training period works? Ask us! Leave any questions or comments and we would be happy to help.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
5111 Ocean Boulevard, Suite E
Siesta Key, FL 34242

www.InfinityBusinessBrokers.com


Could Vs. Should – Buying A Business Without The Right Help



If you’ve ever bought a house or have even just rented an apartment, you know the importance of agents in those transactions. Your real estate agent or your rental agent helped you with locating potential properties, let you in to take a look around, assisted with your purchase or lease contract and was there throughout negotiations. While it is possible to buy a house on your own or rent your own apartment, it’s definitely easier with someone who knows what they’re doing by your side. When it comes to the small business market, the same will be true. It’s going to be much easier with help.

 

Business transactions are inherently very, very complex.

 

If you’ve never been through a business transaction before you are probably going to have an impossibly difficult time navigating everything that needs to happen. That’s where business brokers come in

 

 

A business broker is a transaction agent. Their job is to get a business sale from start to finish. They help buyers by guiding you through from you initial contact all the way past the closing table.

 

Your broker will talk to you about your goals for business ownership, the amount of capital you are able to invest, the areas where you would like your business to be located and your education/experience. Your broker will then help you with your business search, narrowing down the choices based on your feedback. Once you have found a business or two that interests you, you will sign nondisclosure agreements to gain access to the business name and some cursory financials. If you like these businesses your broker can schedule conference calls with the sellers as well as site visits when there are no employees or clients around. Your business broker will then help you write your offer which, if accepted, will become the purchase contract. The business brokers will act as buffers during negotiations between you and the seller – a very important role. They will also negotiate with your future commercial landlord and property manager to ensure you get a fair lease. Your broker will also help you with the licenses and permits required for you to take over as owner.

 

This is a big list – and it would be quite an undertaking for someone who has never been through it before. Very few business transactions go through successfully without help. An experienced and qualified business broker has not only been down this road many times before, but they know where the pitfalls are going to be and can help you avoid them. 

 

The message here? Could you buy a business without a business broker? Maybe. Should you? Definitely not.

 

Are you considering buying a business but aren’t convinced you need a business broker? Do you have more questions about what a business broker can do to help you throughout the transaction process? Please feel free to leave any comments or questions. We would be happy to help!

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
5111 Ocean Boulevard, Suite E
Siesta Key, FL 34242

www.InfinityBusinessBrokers.com


The Justifiable Offer: Why A Low-Ball Is A Bad Idea



You’ve done the searches. You’ve analyzed your options. You’ve done a few conference calls with sellers and you think you’ve found the right business for you. Your next step is a big one, and your decisions here can absolutely make or break your chances of buying this business. It’s time to make an offer.

 

Your offer is important for a number of reasons. The offer you put together (if accepted) will become the purchase contract. This contract will include not just the final sale price but many other parts of the transaction that will need to be negotiated. Think the length of your training period, the terms of the deal and how existing contracts will be assigned – just to name a few.

 

This all-important document essentially contains all the parts of your deal that will need to be negotiated. The fluid nature of an initial offer/purchase contract means the first version – your version – is just a place to start those negotiations. It should go without saying that you need to start off on the right foot. 

 

 

The relationship you have with the seller, although not a permanent one, will be critical to the success or failure of your transaction. You have to talk to this person, meet with this person, iron out a deal with this person and then most likely work side by side with this person during your training period.

 

This is not a relationship you want to start with a perceived slap in the face.

 

What do we mean by that? You do not want to low-ball a seller just to see how desperate they are or how great of a deal you can get. People who intentionally low-ball business sellers aren’t business buyers. They’re tire-kickers. Your initial offer speaks volumes to a seller about how serious you are and what it’s like to work with you. You are making a financial offer for something that seller has invested countless hours in, has spent years building and has made sacrifices to maintain. Yes, business transactions shouldn’t be emotionally driven, but in the small business market it really can’t be helped. No one wants their blood, sweat and tears treated like a cheap car.

 

What should you do instead?

 

Make a JUSTIFIABLE offer.

 

A justifiable offer is a simple concept – it’s something based in reality and backed up by data. You’ve looked at the numbers, you’ve considered the current market and you’ve come up with a number that makes sense – not the lowest, rock-bottom price you’d love but something you feel (based on the data you have) is fair.

 

Making a fair offer tells a seller that although you may not want to give them their full asking price, you are a person interested in making a deal happen. You are someone who values their business and all they’ve invested. 

 

How do I make sure my initial offer is fair? Talk to your business broker about what you’d like to offer, and then listen to their advice. They know the market, and can give you insight into whether or not the number you’ve come up with will be a good point to start negotiations.

 

The message here is simple. If you are serious about buying a business the best way to start your transaction is by making a fair and justifiable offer. 

 

Have you looked at businesses and want to know more about how sellers come up with their listing price? Do you have questions about what an initial offer/purchase contract entails? Ask us! Leave any questions or comments and we would be happy to help.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
5111 Ocean Boulevard, Suite E
Siesta Key, FL 34242

www.InfinityBusinessBrokers.com


Buying? Why Are Good Businesses For Sale?



 

If you are someone who is interested in buying a business, you are more than likely looking for a profitable business that has a good share of the market and a great location. You are probably not going to be willing to buy a business that is on the fast track to failure and bankruptcy – so as you begin searching for businesses you may have pondered a pretty big question.

 

Why would anyone sell a perfectly good business?

 

This question is a very important one to ask as you search for businesses, and it is a question that any business seller should be willing and able to answer. If you are unable to get an answer from a business owner, this could be a major red flag.

 

Here’s something many people don’t understand. Most of the reasons for selling a business have very little to do with the business itself. A large percentage of the time a business is on the market because of the personal life of the owner, not because the business itself is somehow in trouble.

 

Let’s look at some reasons for selling that have more to do with the owner than with the business:

 

Retirement. This one goes without saying. An owner who is ready for another chapter in life is willing to sell a perfectly good business so they can move on.

 

Divorce. When husbands and wives are partners in a business, sometimes the business gets sold as part of the divorce.

 

Partnership disputes. Most partnerships start well, but not all end that way. If there is a breakdown in a partnership where both parties want out, it can mean putting the business on the market.

 

Medical reasons. If the owner or a member of their family has a medical condition that will take precedence over the business, or will keep the owner from being able to run the business, the business will likely end up on the market.

 

The kids decided not to follow in the family footsteps. Many small business owners have their children work with them in the business, but when the time comes for mom and/or dad to retire the kids may want to do something else.

 

There are many reasons that a perfectly good business ends up on the market, the key is to find out the real reason the owner is looking to sell. If the reason has little to nothing to do with the business itself, then you are looking at a potentially great business acquisition.

 

Are you looking for a business to buy, but have come across many that seem too good to be true? Do you have questions about how to find out the real reason a business is for sale? Leave us a comment or question here, and we look forward to working with you on your road to business ownership.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
5111 Ocean Boulevard, Suite E
Siesta Key, FL 34242

www.InfinityBusinessBrokers.com

 

 



Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

5111-E Ocean Blvd
Siesta Key, FL 34242

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

5111-E Ocean Blvd
Siesta Key, FL 34242




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