Landlord and Premise Lease Issues
Many businesses have premises that are required for them to operate, which are rented or leased. When a business is sold, many of these leases have conditions about changes in ownership and or personal guarantees that need to be transferred. Often, the leases have to be renegotiated with the landlord's legal council. The issue is that this whole process can be slow, tedious and time-consuming. Usually, it is what it is and needs to be done if the Buyer wants to stay on the same premises. But having these negotiations is often left late in the process and ends up delaying the whole business sale. So the advice we give is to consider this a critical path item and to start this stream of work early knowing it could go very slowly, especially if the landlord is an institution in our experience.
Partnership Issues
Many businesses are owned by more than one person. However, often one person has a significant majority so is used to calling the shots. This majority shareholder is usually the one that initiates the business sale and is most involved in the process. Occasionally, when a significant amount of work has been done one of the minority shareholders decides that they are not in favour of the sale for some reason. Most shareholder agreements have drag-along/tag along provisions which would mean, in theory, they can be forced to go along with the transaction but this can be costly and time-consuming. Therefore, it is usually prudent to make sure all of the shareholders are on board with the business sale before the process starts or be prepared early to deal with any legal action to force the transaction through if necessary.
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