Transfer of leases on a business sale can be a tricky process if not done correctly. I have heard of and seen many deals fall apart because the owner informed the landlord at the last minute that a new owner was about to take over the current business, not knowing that the landlord/owner would have no intention of renewing/or transferring the lease due for various reasons.
A Seller Recently Asked Me This Question:
"How does one best deal with a lease transfer? We have a 5 year lease; we are three years into that lease, and although we haven't sold our business yet, we are reluctant to bring this up to our landlord because we don't want to add another variable to the sale. I have heard that one way this can be dealt with is to simply tell the landlord that we have taken on a new partner, and that the partner is going to take over the lease. This seems like a good way to manage the lease variable. Are there any others?"
My Response:
Telling the landlord you have taken on a new partner is one way of dealing with this particular situation, however when a potential business buyer looks pretty serious, has made an offer and has started their due diligence you should have a meeting with the landlord and let them know a new buyer (or partner) will be either taking over the existing lease or will need to negotiate a new lease.
You want to get this part of the sale process done relatively early in the process since I have heard from many potential sellers and buyers that landlords have killed the deal for various reasons.
Landlords don't like surprises, it is better to work with them and work out the details before you get too far into the deal and then have it fall apart!
Good luck in transferring your lease to the new buyer of your business. Following my suggestions on this part of the deal should keep the sale on track!•
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