Buying or Selling a Business
Buying or Selling a Business? If so you might find the information below useful. But if you simply want to ask us to deal with a sale or purchase for you, call us on 020 8945 0323.
Commercial conveyancing
Points to bear in mind
Some tips
Cost of selling
Other costs involved in selling
Cost of Buying
Example
Can costs be reduced?
What do we do on a purchase?
Commercial conveyancing, buying or selling a shop, office, warehouse or any other commercial property is similar to buying a normal house or flat. Just as with a house or flat we check the title and carry out prudent enquiries but commercial property, by its very nature, is often more complicated and there are important differences.
Most commercial property is leasehold. If you are buying, remember, leases are drafted by the landlords solicitors and are often heavily weighted in the landlords favour. The most important time for trying to get a proper balance into the lease is right at the beginning of the negotiations, before you have committed yourself and before the landlord or it's agent really knows you want the property. While they still think they could lose you they are more likely to make concessions. When they know you are committed emotionally even if not legally they will be more likely to play tough.
In an ideal world you would consult us before making an offer. We would then advise you on the terms to try and agree:
- A rent free period to cover the cost of refurbishment or fitting out.
- Each side paying their own legal fees (beware of agreeing to pay the landlords legal fees). If you must, at least agree a maximum contribution and not an open cheque for whatever they come to).
- A break clause allowing you to get out at the first rent review if the business has been unsuccessful or the new rent is too high.
- No personal guarantees.
- Reasonable rent review and assignment clauses.
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If in the enthusiasm of the moment you agree unfavourable terms before consulting your lawyer it is very hard to undo them afterwards.
Price
If you are buying or selling an existing business it is common for the price to be divided up (apportioned) so that part of it is for the lease itself, part for the fixtures and fittings, part for goodwill and part for stock. This can have considerable tax implications as each of these aspects are subject to different tax rules on depreciation and allowances.
Planning
Local Councils can be very strict on planning use. We check as well as we can what the current use is and whether it authorises the use you intend. If you need a change of use we can help you with the application. Oddly enough, unless a planning application has been made in relatively recent times, many Councils don't know what planning use applies to individual commercial units and are reluctant to answer a straight enquiry in case they get it wrong.
Ownership
What is the best way of buying? As a private individual, a partnership or as a limited company. We can advise and if needed prepare a suitable partnership agreement or form a limited company either in the UK of overseas.
At Sayer Moore & Co we have 20 years experience in helping and advising businesses in their property transactions. We want you to succeed so that you remain our client for life.
- Remember you are dealing with human beings. With all the good…and the bad.. …things that involves. Most will be scrupulously honest and fair. Others will be so worried about losing the deal that they will tell you what they think you want to hear. A very small minority will mislead you. Listen to what they say to you but always rely on your own common sense and if in doubt…double check with us. We will always be straight with you about what is going on.
- If you have to move by a certain date, changing jobs, getting married, fitting in with school terms TELL US as early as possible. We will do everything we can to meet your deadline. Otherwise:
- Be realistic about timing. Moving home takes on average about ten weeks. That's not because solicitors are slow and deliberately delay matters. (We don't get paid till the end so it's in our interests to speed matters up). Why it takes time is because conveyancing is all about protecting the client. The amount of money involved in buying any property is so high, the purchaser's solicitors have to carry out a whole range of enquiries, searches and other checks to protect the buyer and their mortgage lender (if there is to be a mortgage) from expensive, avoidable problems. These checks involve getting information from a range of different people and organisations, including other lawyers, local councils, private companies, building societies and banks. Some of these are efficient and well organised. Others aren't. And remember, it doesn't matter how quickly we do our job, if the people you are buying from or are selling to aren't ready, nothing can go ahead until they are.
- Don't count on moving on a certain date until contracts are exchanged. Whatever promises the people you are buying from or selling to make, or your mortgage lender makes don't rely on them until what they promise actually happens. More stress is caused to clients trying to move home by false promises than anything else.
- Don't book to go on holiday right in the middle of the transaction. You have to be around to give instructions and sign documents.
- If you know the property has anything unusual about it, for example…..it's been converted into flats, the loft has been turned into an extra bedroom or it's unclear where the garden begins or ends… let us know.
- Some of the checks the buyer's solicitor carries out are routine and are done automatically. Others will be triggered off by the nature of the individual property being bought. If we are acting for you in buying, unless you have given us some pre-warning, we may not know what extra checks are needed until a copy of the title documents is examined or information is received from one of the routine checks. This can slow the transaction down. In addition it's increasingly common for mortgage lenders to include unexpected conditions in their mortgage offers which the buyer's solicitors will not know about until a copy of the offer is received.
- Budget for all of the likely costs
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