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Selling A Business With A Month-To-Month Lease


Lease Agreements When Selling A Business

Depending on the type of business, a month-to-month situation can be severely detrimental to the value of the business. For example, if you are the owner of a mailbox store for sale, it is unlikely a Buyer would risk buying the store without a solid long term lease. The customers renting the mailboxes are tied to that specific address. If the store is forced to relocate, many customers and thus much revenue would potentially be lost.

On the other hand, if you are the owner of a wholesale distribution business and you have no walk-in traffic, it makes no difference where the business is located. The Buyer may desire to relocate the business in which case a month-to-month situation is highly desirable.

If your business is retail and your clients are local, you may be able to relocate the business within the same area and retain most if not all of your customers - as long as they know where to find you.

There is no "one size fits all' answer or solution in business transactions. That is part of the challenge. Every business is unique as is every Buyer and every Seller. A good business broker must be a creative problem solver and must focus on making sure the Buyer and the Seller both get what they need from the transaction.

Categories: BizBen Blog Contributor, Deal And Escrow Issues, How To Sell A Business, Selling A Business


Comments Regarding This Blog Post

Contributor: Transactional Attorney

Peter makes a great point. The more "location dependent" a business, the more a business owner should want a long-term lease. Options to renew can be very effective at finding a balance. Generally, I advise business owners to gain flexibility and mitigate lease liability exposure by negotiating a lease that has a moderate term (such as 5 years) with as many options to renew as they can get. This way, the business owner is in control of whether they are in the location for the short haul or the long haul.


Great posting Peter. As a previous business owner, I can share my own experience on how changing a location can drastically affect a business. I owned a liquor store and the landlord approached me to move from the center of the shopping center to the end, because they wanted to make room for a major tenant. The landlord offered to pay for the move and all tenant improvements. I moved about 10 stores down, and many of my previous customers would park in front of the old location, see I wasn't there anymore and never came back, and this really hurt my business. My advice for a retail owner is that once a customer sees you are not there anymore then they are difficult to get back. A month to month lease may work for accountants during tax season who want a visible location for people doing their taxes from February to late April or someone opening up a Halloween store, etc.






  Helpful Resources To Assist In Selling And Buying California Businesses
Elizabeth McGovern: Escrow Services - San Francisco Bay Area

McGovern Escrow Services, Inc., is a leading independent escrow company. We are a trusted partner with our clients, assisting them through the tangled bulk sale & liquor license transfer process. We provide attentive, quality & innovative customer service. Phone Elizabeth McGovern at 415-735-3645.

Willard Michlin, CPA, Certified Fraud Examiner, Due Diligence

Willard Michlin, CPA #106752, offers buyers step by step training & assistance in doing Due Diligence Services when they are thinking of making an offer, or are in process of investigating a business purchase. He helps to determine the actual net profit even when there is cash. Call 805-428-2063.

Helen Yoo, New Century Escrow - Escrow Services In Southern California

New Century Escrow, Inc. is a fully licensed & bonded independent escrow company. Over 20 years combined experience in handling bulk escrow transactions. Multi-lingual staff that speaks your language, including Korean, Chinese, Vietnamese. Call Helen Yoo direct at 626-890-1151.

Diane Boudreau-Tschetter: Escrow & Bulk Sale Services - CA

California Business Escrow, Inc. is a full service independent escrow company serving all of California and has expertise in a wide range of escrows. Our team prides itself on providing an exceptional escrow experience. For more info phone Diane Boudreau-Tschetter at 888-383-3331 or 209-838-1100.

Brad Steinberg, Business Broker: Laundromat Specialist

PWS is the leading laundromat broker in California. Since 1968 PWS has brokered over 2,500 laundromat sales. With over 90 employees dedicated to the coin laundry industry, PWS has 18 licensed agents, a 3 person in-house finance department, 10 service technicians and a 20 person parts department.

Shalonda Chappel: Escrow & Bulk Sale Services - Southern California

Escrow services to brokers/agents, sellers, & buyers. Established 43 years. Extraordinary service. Experienced with handling difficult transactions. One stop for all your escrow needs: Bulk sales, lien searches, UCC searches, liquor license transfers, publishing & recording services. 951-808-3972.

Janet Carrera: Escrow & Bulk Sale Service - SF Bay Area

Redwood Escrow Services, Inc. is a full service, licensed independent escrow company. We are EAFC Fidelity bonded, fully insured & licensed with the Department of Corporations. Committed to offering our clients the most comprehensive variety of escrow services available. Phone Janet at 510-247-0741.

William F. Ziprick, Attorney: Legal Services For Buyers And Sellers

Through creative problem solving, attention to detail, accessibility, & understanding that unnecessary delay is often a deal killer, I work closely with my clients and other professionals to consistently achieve a high rate of successful closings. Office: 909-255-8353, Cell: 509-951-7230.


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