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THINGS TO CONSIDER

So you want to own your own business - Part 4

5/19/2016

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Real Estate as Part of the Business Acquisition

If the transaction involves either the purchase of real estate, a commitment to a real estate lease for a period of greater than a year, or the business being acquired is location dependent, the buyer will want to consider including some real estate experts.  A business may be location dependent due to market access, or zoning laws, or the seller may be packaging the deal to include a lease of seller-owned property.
  • Real estate agent
    • When the buyer is also buying real estate, all usual precautions and due diligence needs to be completed, and for this purpose it is beneficial to have someone who knows real estate closings and requirements to guide the buyer.
    • When the buyer will be leasing, it depends on the situation whether an agent needs to be involved.  In a seller lease-back, the attorney can usually handle any lease arrangements for the buyer.  If the buyer must locate new space, then a leasing agent is generally advisable. In either case, always have your attorney review the lease before signing. They can help avoid unintended results, such as a tenant who is responsible for putting on a new roof two years before the lease terminates, or lack of protection from the bankruptcy of a landlord or sale of the property. The more location dependent a business is, the more important the terms of a lease.
  • Environmental consultant
    • There are at least two circumstances when I suggest an environmental consultant be engaged- when the buyer is acquiring real estate with any history of recognized environmental condition (REC) associated with it or that is in proximity to such a property (think gas station, dry cleaner plant, etc), or when the industry in which the business operates means that they will be responsible for disposal of waste. 
Essentially, the real estate component of a brick-and-mortar business is an independent transaction which merits at least as much attention as does the purchase of a new home.
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www.FlackLawPC.com

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Santa Rosa, CA 95404
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