- Are you ready to sell your business?
- Are you retiring or wanting to jump into something else?
- Do you need funds to expand?
- Is the business failing?
Over the years or months, you should have developed a good relationship with the landlord.
- SELLING THE BUSINESS: Tell the landlord that you are planning to sell your business. The landlord will usually say fine. Ask what information the landlord wants to review of the buyer. If there are any forms/applications ask for a copy.
- CLOSING THE BUSINESS: If you are struggling and may end up closing the business (out of business), tell that to the landlord as well. Some landlord's will be nice enough and tell you that if you move out by the end of the month, nothing more has to be done. If this is the case, get this in writing from the landlord. A surrender of lease agreement signed by the landlord. The reason why you need this in writing is because there is an effective lease. You're technically in breach of the lease contract with the landlord. In some cases, Landlord's may not care for you at all. At this point you'll need to ask the landlord if it's possible to find him a replacement tenant. If the landlord says fine, find a suitable tenant. Assign the lease if a new tenant is found. At the worst case scenario, you may just have to pick up and go. At this point, the landlord will definite sue you for the vacancy period of the premise.
Before you have a broker try to sell your business, try to sell it on your own. Place free advertisements on the internet or paid advertisements in your local newspaper companies. Brokers charge an arm and a leg. (up to 5% of the sales price). Depending on your circumstances you may want to list with a broker.
BINDER AGREEMENT
Enter into a binder agreement with the buyer before giving the buyer a copy of the lease. It's a good faith deposit of $500 to $1000. If the buyer returns the copy of lease back to you, and asks for his money back, just give it back to him. You have no basis keeping his money.
Information to Obtain
BUSINESS SALE
1. Where? New York or New Jersey?
2. What type of store? (i.e. Nail Salon, Bakery, Restaurant, Deli, etc.)
3. Does client have copy of lease?
Ask if a copy was given to the buyer, if not have client give copy to buyer.
4. Ask for the following:
a) Contract price: $xx,xxx.xx
b) Deposit: $xx,xxx.xx
c) Balance due at closing: $xx,xxx.xx
d) Promissory Note: $xx,xxx.xx (If any)
e) Sales Tax Escrow: $xx,xxx.xx
(When closing, we always hold onto a sales tax escrow. If IRS Audit’s and finds that the seller owes taxes; the sellers have to pay it) This usually ranges from $2,000 ~ $50,000.00
f) Restrictive Covenant: __#__ of blocks over __#__ years
(Sellers can not conduct business in certain block radius for certain # of years)
g) Does seller want to add in the following language on the contract:
“Seller has the absolute right to cancel”? (Please ask Mr. Idouchi as to what this language is)
5. Do we need to deal with the landlord? If so, obtain landlord’s information, company, name, address, phone number, fax number, and/or email.
Contact Landlord or its agents and check what documents are required to obtain consent to an assignment or new lease.
6. Any special tasks? (i.e. Promissory note = Seller gives the personal mortgage)
7. Tell client they have to give us a retainer/deposit $300.00. Ask them to bring a copy of their business certificate or filing receipt. Further, ask them if the name on the certificate is the same as the store sign/awning
Give the above information to attorney to prepare contracts.
** Purchase in NJ must file Bulk transfer notice as soon as contract is signed
Purchase in NY for Deli/Grocery should file Bulk transfer notice as soon as contract is signed
Ask attorney for legal Fees: Usually $850 - $1500 subject to change depending on the case
SALE OF BUSINESS
1. Get the information on the terms, purchaser(s) and his/her attorney information.
2. Prepare and send the contact with our client=s information which is a
corporate filing receipt or business certificate.
3. Wait for the contract to be returned with a deposit.
4. Set for the closing date.
(To be continued)
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