Leases: A Ticking Time Bomb in Your Company's Merger
Counselors of Real Estate
When buying or selling a business, there will likely be real estate tenant leases that are part of the business assets. For example, the leased premises may be an essential office location or plant. Implicit in the price may have been the buyer’s ability to use and exploit these key locations through the tenancy. That means that the seller and buyer need to deal with the assignment provisions found in those leases. Both buyer and seller need to determine how the leases may be assigned in the context of the sale of the business or else determine what could be done if a lease cannot be assigned.
This article, authored by Richard E. Strauss, will hopefully delineate the issues that should be considered, so that both parties can smoothly structure, document and conclude the sale without risking a future lease assignment issue.
Reprinted with permission from Real Estate Issues® (Vol. 39, No. 2, 2014), published by The Counselors of Real Estate®. CRE is a nonprofit professional organization for leading real estate advisors around the world.