London Commercial Property Solicitors
Our London commercial property solicitors advise clients from around the world on matters relating to business purchase & sale, share sales and leasehold commercial property transactions.
Our specialist London commercial property solicitors conclude on transactions quickly thus reducing costs and enabling businesses to progress efficiently. Our team provides practical and sensible advice on issues that may come up, thus empowering clients to make informed decisions. We are particularly familiar with London commercial property.
When dealing with business sales or purchases, the team advises on how to deal with the transfer of employees, existing liabilities and contracts, existing assets of the business, and company related matters.
Our experience extends to, but is not limited to:
- All aspects of freehold commercial property and leasehold commercial property including buying pubs, buying shops, buying restaurants, and buying office space.
- Transfer of existing leasehold shops, leasehold restaurants, leasehold pubs, leasehold office spaces, and of course licences to these premises and businesses.
- Sale and purchase of businesses as a going concern.
- Asset purchase and sale.
- Company share purchase and sale.
- Negotiating on terms of leases.
- Lease extensions and renewals of existing leases.
- Negotiating and advising on the termination of leases (lease surrender).
- Advising on rent reviews.
- Advising on dilapidation issues.
- Service charge disputes.
- Advising on bridging loans and commercial mortgages
Contact us to speak to one of our highly qualified London solicitors on 0845 838 7294 or email firstname.lastname@example.org and one of our team members will be in contact with you.
- Share Sale or Asset Sale for Businesses
- Employment issues that arise during business transfers and TUPE
- London Commercial Property Frequently Asked Questions
- How to prepare your business for sale
- How to improve the value of your business
- Employee rights while buying or selling a business
- Business Premises: To Buy or Not to Buy?
- What is involved in buying or selling a business?
Share Sale or Asset Sale for Businesses
There are two ways in which buyers usually acquire businesses – through shares or assets. The buyer buys either the shares or the assets of a company. Both are valid methods of buying a business, but each has its own advantages and disadvantages.
During a share purchase, the buyer purchases the complete business entity including all its assets and liabilities, and obligations to any third parties. As the purchase is complete, the buyer simply assumes responsibility for the business. If you’re looking to buy a business through share purchase, due diligence is of utmost importance. For the seller, a share sale makes sense because it completely frees them up from all further obligations. It also attracts less tax than an asset sale, because an asset sale requires the seller to pay taxes twice – once on the gains made from the sale and then when he distributes the sale proceeds.
As a buyer, asset purchases are usually preferable because only the assets and liabilities that have been identified an agreed upon will be bought. All other assets and liabilities will continue to stay with the business. The buyer will also not be responsible for the future or any of the previous actions of the business. London commercial property possessed by the business can be sold in an asset sale.
Are you looking to buy or sell a business? Our London commercial property solicitors will advise you on the most appropriate type of purchase for the specific business that you’re looking at. We will help you review all the agreements and also negotiate with the other party’s solicitors to come up with the best possible option for you.
Employment issues that arise during business transfers and TUPE
Any business owner is free to sell or transfer his business to someone else, but there are certain employment issues that need to be considered during the process. Transferring or selling a business impacts not only the owners, but also the workforce. There are certain laws that have been designed to ensure that the employees enjoy the same terms and conditions even if the company is taken over by someone new.
If you’re buying or selling a business, you need proper advice on employment matters to ensure that the workforce of the new business will be treated as stipulated by the law.
TUPE is Transfer of Undertakings (Protection of Employment) Regulations that come into effect when a business is bought or sold. In simple terms, it ensures that the employee terms and conditions are not affected due to the transfer.
TUPE is applicable in the following situations:
- Selling a business via sale of assets.
- Gift of business through a Will.
- Changing of licensee of franchisee
TUPE is not applicable in the following:
- Transferring of assets only, such as London commercial property or other assets of the business.
- Transfer by share takeover.
- Transfers of contracts for providing goods and services, which does not involve transferring the business or a part of it.
If TUPE is applicable, it is required that all the existing terms and conditions of work as well as continuity of employment are preserved. Employees who were originally employed in the transferred business and those who would have been in employment had they not been dismissed due to the transfer are protected by TUPE.
If you need the expertise of London commercial property solicitors to ensure that your business transfer does not violate the TUPE regulations; please get in touch with us for a free consultation.
London Commercial Property Frequently Asked Questions
Do you need some legal advice before your business decides to buy or lease a property? Check out the following FAQ.
Will you be able to extend your lease?
Under the Landlord and Tenant Act 1954, most business leases of at least six months in duration enjoys a “security of tenure.” What this means is that once the lease is over, the tenant automatically becomes entitled to a further lease at the market rent if they take certain steps.
Under the same Act, the landlord is also free to oppose lease renewal, but the grounds for opposition are limited. In instances where the tenant has seriously breached his obligations or the landlord wants to redevelop the property or use it for himself, the lease may be terminated. If the lease has been “contracted out,” the landlord will have no obligation to renew the lease and the tenant will not have the protection of the Landlord and Tenant Act 1954.
London commercial properties are showing a trend of Landlord’s wanting to contract out of the Landlord and Tenant Act 1954. You must seek legal advice before agreeing to contract out of the Landlord and Tenant Act 1954.
Is it possible to avoid rent reviews?
You should negotiate this particular issue right at the outset of the lease. Usually, for a short lease you would have a single rental figure for the entire duration of the lease. For a long lease, you may be able to negotiate certain fixed increases throughout the lease duration. However, with London commercial property, it is very difficult to obtain a lease longer than three years without a rent review clause. Almost all rent review clauses in a London commercial property lease will be an upward only rent review. This means if the rental market falls; the Landlord is still protected from the rent on the lease being reduced. It is always better to take professional advice from a London commercial property solicitor or a qualified London chartered surveyor in order to understand what the market rent is like.
Will you be able to get out of the lease early?
If you are able to find a new willing tenant that the landlord is happy with, you may be able to transfer the lease. This is known as “Assignment.” You could also negotiate for the inclusion of a break-clause right at the outset allowing you to end the lease on a set of specified dates.
Most London commercial property solicitors would negotiate a break clause into long leases but the bargaining powers will dictate whether the clause is open to both the landlord and tenant to break the lease or it is only one way. London commercial property leases generally tend to have break clauses allowing both landlord and tenant to break the lease.
Will you be able to sublet your lease? Most London commercial property leases permit subletting subject to obtaining the landlord’s consent. You will need the landlord’s approval for the terms of sublease. However in London, commercial properties tend not to be sublet. Make sure you seek professional legal advice from a specialist London commercial property solicitor before subletting.
Can you sell the lease? Most London commercial property leases will allow the existing tenant to transfer or assign to a new tenant with the consent of the landlord. The landlord is free to impose conditions such as the following:
The outgoing tenant may be obliged to enter into an authorised guarantee agreement, guaranteeing that the new tenant will follow the lease terms. OR
The incoming tenant may be required to provide a guarantee for the performance of lease terms.
Will the landlord be able to end the lease early?
If the landlord has included a break clause in the contract, they have the freedom to end the lease early. As a tenant, it is unwise to allow inclusion of this clause if you want to ensure business continuity.
The landlord will also have the right to terminate lease under the following circumstances:
- Insolvency of the tenant.
- Tenants breaching the terms of the lease.
- Non-payment of rent.
How long should I take lease for?
A lease gives you the reassurance that you have the right to occupy the property for a long time, but at the same time you’re also exposed to long-term liabilities. If you have taken a lease for 20 years, you are under obligation to pay rent as well as perform other obligations under the lease during the entire duration. Even if you have some financial hardships or you wish to relocate, you may not be able to simply walk away from the lease. The ideal option for a tenant starting a new business venture is to take a short-term lease with an option to extend the lease at the end of the term.
Is it possible to act for both the landlord and tenant?
No. Our professional rules prevent us from representing both the landlord and the tenant. They must seek separate representation.
What if your lease is only for a specific part of the property?
Make sure that the description of the property in the lease agreement accurately matches its physical description. Use an exact plan and establish what is included in the lease and what is not, because it may have implications on repairing responsibilities.
London commercial properties are generally very expensive and the obligations that come with it can be onerous. Therefore before taking on the liability of a lease, make sure you have taken professional legal advice from a specialist London commercial property solicitor.
What are the rights that you need to include in the lease?
Whatever the rights that you will need to use the property in a proper way must be specified in the lease. Right to park a car, right to a passageway to access the property, right to communal areas, the right to store refuse, or any other rights that you need must be explicitly mentioned in the lease.
Explain a contracted out lease.
A contracted out lease is one in which the “security of tenure” provision of the Landlord and Tenant Act of 1954 is not applicable. You should think it through carefully before agreeing on a contracted out lease because at the end of the lease period you no longer enjoy the right to continue occupying the property. London commercial property leases are tending to be contracted out but this is something that a tenant must seek professional legal advice from a London commercial property solicitor before entering into the lease. In particular if the tenant is going to invest significant sums of money in the property.
Who has the responsibility to ensure correct planning permissions are obtained for the property?
It is up to you to ensure that the commercial property’s proposed use includes using it for your planned purposes. You may need to carry out commercial property searches at the local council and enquire with the landlord. However, if you are using a London commercial property solicitor, this is something they will check (if you request) as part of the legal work.
Will the rent keep on increasing?
Normally, with London commercial property lease for three years or more there will be a provision for rent review every third or fifth year. At the time of review, the rent will typically be revised to reflect the market rate at the time. However, London commercial property rent review clauses prevent the possibility of a downward review. Therefore seek the help of a professional London commercial property solicitor before entering into a lease.
What about insurance? Who is responsible? Usually, with London commercial property leases, it is the
landlord who is responsible to insure the property, but he can recover the premium from the tenant by way of a service charge. Obtain the details of the insurance policy well in advance so you may have a chance to budget for the rent.
How to prepare your business for sale
A business can be sold only if someone wants to buy it. Just as in any other sale, the better the business appears to the seller, the higher the price you will be able to receive for it. Prepare your business well to increase the possibility of sale and maximise the selling price.
The most important thing is to give you sufficient time to get the business to such a level that the buyer will be excited about the possibility of owning it.
Here are a few things that you can and must do if you want to improve the prospect of sale and attract a good price for the business:
Seek the advice of experts
Chances are that you haven’t been involved in too many business sales before. It is only sensible that you seek the advice of experts who have the experience of dealing with selling and buying businesses on a daily basis.
A specialist solicitor can help ensure that your business is up to mark in fulfilling all the required legalities. They can also help you prepare the required documentation for the sale. You will need the services of an accountant to ensure that the finances of the business are all in order, and the accounts are prepared in the proper format. A corporate finance advisor or business transfer agent can also help you find an appropriate buyer, and also to negotiate the sale.
Write down a proper business plan
Hopefully, you already have a good business plan in place. If not, prepare one which describes the future direction that the business can take and how it plans to continue generating revenues.
Improve the efficiency of your operations
Organise your existing operations to create a more robust business. These are the things that you need to pay attention to:
- Increase the working capital available.
- Appropriately document all your internal systems.
- Ensure that all London commercial property that the business uses has legal titles. You may need to negotiate with the landlord if you’re on a lease. Also check if the titles have been transferred for fixed assets that were formerly on a London commercial property lease.
- If you have any legal disputes, clear them up.
- Make sure that the finances are all in order and you have realistic sales forecasts.
- Try and retain good employees in key areas.
- Make sure that you are complying with all the statutory obligations, especially those relating to employment, and health and safety.
- Ensure that all your existing employees have employment contracts.
Time it right
If your business is seasonal, it is of utmost importance to time your sale right. Attempt the sale only when the forecasts and finances show a positive trend. You may need the help of an expert to advise you on the state of the economy and your specific industry.
When should you start preparing?
The earlier you start preparing, the more time you will get to tick all the boxes as mentioned above. Forecasts must be prepared preferably over a longer time period. The buyer will obviously perform due diligence, and if they notice any discrepancies it can irrevocably damage the trust. If you haphazardly make multiple changes to the operation just before the sale, it may be viewed sceptically and attract deeper scrutiny and tougher negotiations.
If you want to sell your business, start planning as early as possible.
For more legal advice, please get in touch with London commercial property solicitors at Smart Legal.
How to improve the value of your business
Business owners are at risk of getting caught in the rut and settling into a daily routine where they do the same thing day in and day out. Getting too close to the daily operations may cause you to lose your overall strategic outlook.
The primary purpose of existence of a business is to generate profit. If you want to continue improving the value of your business, look at it anew every once in a while. Here are a few tips to regard your business with a fresh perspective in order to improve its value and efficiency.
Profitability of the business
Is your business profitable? Hopefully, it is, but it needs to be more than just generating a minimum amount of revenue every month in order to be truly valuable. You can check if the value of your business is on an upward trend by checking if the profit is consistently growing, sustainable over the long term, and is not being driven simply by cost-cutting measures.
Tight control on finances
The profitability of your business should not depend on lowering the costs, but it is also equally important to keep a close watch on the costs to improve the value of the business. Tighten your financial control with the help of credit control measures, budgeting, and cash flow management.
Go through the business planning process once again to take an objective look at the business. Really give serious thought to what the business is all about, what the customers want, what you want to achieve, and how you can get there. Also pay attention to what the competition is doing.
A proper Management Information System
A good MIS for Management Information System is crucial for the smooth and efficient functioning of any organisation, especially if it is large. Unless you’re aware of what is happening in each and every area, most of your time will be spent fire fighting. The MIS is an important decision making tool and must be accurate, consistent, clear, and timely.
Resilience to recession
How resilient is your product, really? Is the demand is elastic and will it be affected by economic factors such as recession? If your product is susceptible to any extraneous factor, you will need to develop the business in such a way that it is in the best possible position to cope with any unforeseen eventuality. Some of the things that you could consider include diversification during economic downturn to keep some revenue coming in, or even flexible resourcing which allows you to make quick changes to operational overheads.
Dependencies of the business
The value of a business is determined by how much it depends on the key employees, suppliers, and customers. The loss of any of the three could significantly impact the business, and it is important to have a strategy in place to overcome this.
Most of the legalities that a business must consider are statutory nature. Complying to these requirements may not significantly add value to the business, but non-compliance will become a strict value depressant. Some of the legalities that need to be in place include permits, London commercial property lease contracts, outstanding litigation, customer and employee contracts, license agreements, company records, intellectual property rights, outstanding warranties, and statutory regulations such as health and safety.
Size does matter
This is not to say that a small business cannot be of value and run profitably, but businesses that have large market shares are always seen as safe bets, especially by potential buyers. You can improve the value of your business by increasing the market share, which also in turn generates more revenue. Or you could also take advantage of the unique selling point of the business and establish yourself firmly in a distinctive and inimitable niche. This will increase the value perception of a business, even if it is small.
Time for managing the business
As a business owner, do you have enough time to manage the business? If you find yourself too busy to pay any attention to the operations, find someone reliable to delegate the responsibilities to. If you are unable to do this, then this is a clear indication that the business is way too reliant on you and therefore less attractive as a value proposition. Work on this important factor as soon as possible.
The documentation of your business must be clear, accurate, and well-organised. This not only helps improve the efficiency of your business, but also becomes an attractive selling point if you’re ever considering putting the business up for sale. Make sure that you have all the London commercial property leases, contracts, and other documents in order.
Get in touch with our expert London commercial property solicitors at Smart Legal for more advice on how to improve the value of the business.
Employee rights while buying or selling a business
Are you buying or selling a business? Be aware that you have several legal responsibilities towards your employees.
The Transfer of Undertakings (Protection of Employment) Regulations 2006, or TUPE as it is more commonly known, is a regulation that offers protection for employees while the entire business or a particular contract gets transferred from one owner to another.
Effectively, the buyer steps into the seller’s shoes and continues with the company’s obligations towards the existing employees. From the point of view of the employee, their employment status essentially remains unchanged regardless of the ownership, and their rights and outstanding claims against the employer also remain intact.
TUPE has a significant impact on a business sale. Here are a few things that you need to be aware of:
- As a buyer, you will need to ensure that the contract of purchase contains adequate protection against any of the existing employees’ claims, for example relating to that of discrimination or personal injury.
- As a buyer, you may want to change the terms of employment of certain employees. TUPE provides for the previous terms of employment to continue even after transfer, so you will need to be extra careful to avoid any claims from the employees.
- TUPE also gives employees the right to be informed or even consulted with about a proposed business sale. Both the seller and buyer are equally responsible for this, and if it isn’t done they could be liable for compensation. Consider the following issues in this situation:
- o If you’re a small business, consult with the employees on an individual basis. For large businesses, elected employee representatives or trade unions may need to be consulted.
- Employees must be informed of the proposed sale and the reasons. They should also be informed of the buyer’s proposals about the workforce. Provide this information sufficiently in advance in order to allow enough time for consultation before the sale.
- Commercial confidentiality is not usually considered as a valid reason for failure of proper consultations. This is because once the buyer and seller are both legally committed, the time between the agreement and completion of the sale can always be negotiated to allow for a proper consultation to take place.
Business owners who want to sell their company or any of its assets such as London commercial property must be careful not to ignore the rights of their employees. It is advisable to seek specialist legal advice well in advance of the sale in order to prevent any oversights.
Business Premises: To Buy or Not to Buy?
While there are many small businesses that can be run from home, many require proper business premises if they are to function in an efficient manner.
If you’re on the lookout for London commercial property for your business, you need to consider the following factors:
Start with the basics
Ask yourself why you need the premises. Is it just a space for you to work out of or a retail outlet which must attract customers? This is a fairly obvious one, but certain cases may require deeper thought.
Where exactly do you want the business to be located?
Is visibility an important factor? Do you need the premises to be easily accessible to customers and suppliers? Do you also need adjacent parking facilities?
Perhaps the most important question of all is – how much can you afford?
Look around at similar businesses to see what kind of London commercial property they have and how much business they are able to attract. What are the improvements needed to make the model better or more suitable for your specific business needs?
After figuring out what you’re looking for, you can actually start the search for property by:
- Approaching the local council authority.
- Approaching a commercial property agent.
- Searching online.
- Checking out advertisements in the local papers.
- Placing advertisements.
- Searching via a business contact.
Call in the experts before signing on the dotted line
After you have found the London commercial property that best meet your requirements, get in touch with property experts before you decide on the final agreement with the landlord. Sure, you have to pay for expert advice by London commercial property solicitors, but it can save you money in the long run. Property mistakes can be extremely expensive to rectify and may even lead to failure of the business.
Consult a London commercial property solicitor who will be able to advise you on the legal issues of lease or business tenancy agreement, and a chartered surveyor who will advise on the suitability of the location and the proposed terms of occupation.
Tenancy agreements and leases
A tenancy agreement is the verbal or written agreement that you (the tenant) have with the landlord. If it is for less than three years, a verbal agreement would do. However, it is always recommended to go for a written lease contract because you never know what might happen. If things go south, you will find it extremely difficult to take remedial action if there is no proof of agreed terms.
A London commercial property lease is the written document that sets out the tenancy agreement. The terms are usually used interchangeably, but the important thing is about what the document contains rather than the technical name for it.
If you need more information about what you must look for in your lease or advice on the purchase or sale of business premises, please feel free to get in touch with London commercial property solicitors at Smart Legal. —————————————————————————————————————– What is involved in buying or selling a business?
What are the different legal aspects that are involved in buying or selling a business? This article deals with all the questions that you may have.
What is the difference between a transfer of shares and transfer of business?
Basically, a business sale can be carried out in two ways – via transfer of shares or transfer of business.
A transfer of shares is also called corporate transfer. This is applicable only when the business is being run as a limited company because it is the shares that are getting transferred. The company is considered to be a legal entity which has the right agree on contracts, take out loans, or perform other activities. The company owns all the assets including London commercial property and the shareholders own the company through the shares. So technically, it is the company, with all its assets and liabilities, which is up for sale. Anyone buying the shares takes over the ownership of the company including its assets and liabilities.
In a transfer of business, the buyer has the flexibility to take ownership of the entire business or a part of it. So certain assets and liabilities may be excluded.
What are the key aspects in a transfer of shares?
Continuity of the company Since the company is considered to be separate legal entity, it continues functioning regardless of who the current owner is. The day-to-day business operations, and contracts with customers, suppliers, and employers continue as usual. Simplicity of the process Transferring shares can save you a lot of time and money. Since it is the company and not individual owners that enter into contracts and agreements with others, you don’t need to seek the approval of any third party for transferring separate agreements to the buyer. Payment goes directly to shareholders If a company wants to do business transfer by selling some of its assets, the payment goes to the company. It will then have to pass on the proceeds to the shareholders who had actually initiated the sale. The proceeds from transfer of shares attract several tax reliefs, whereas the proceeds from the sale of assets will come under corporate tax regulations. Contracts with employees The contracts that the company has with its employees will remain unaffected. Pretty much the same thing is achieved via business transfer through Transfer of Undertakings Regulations (TUPE), but the actual operations that need to be performed to achieve the results can be cumbersome. Stamp duty There is a 0.5% stamp duty for the transfer of shares. Transfer of London commercial property asset may attract up to 4% stamp duty. If most of the assets involved in the sale are London commercial properties, the stand duty will form an important consideration in deciding which type of sale to adopt. What are the key aspects involved in a transfer of business? A fresh start The buyer does not inherit any of the past trading on tax liabilities of the business. It’s a clean break and a new start. Flexibility
Though the rights of the employees are protected by the Transfer of Undertakings Regulations, the seller and buyer have the freedom to agree on the assets and liabilities that are to be included or excluded from the sale.
So which is the best type of transfer?
Transfer of shares is applicable only if the business is run as a limited company. If you are a sole trader or a partnership, you have no other option but to do a transfer of business.
There is no best option here – it is completely dependent on the different circumstances of the business, and the negotiating powers of the buyer and seller. It is advisable to seek the expert advice of a London commercial property solicitor, accountant, and a corporate financial adviser to help you work out all the important issues. What happens after the form of transfer has been decided?
Both transfer of shares and transfer business have commonalities as follows:An agreement for exclusivity
The exclusivity agreement is a document that prevents the seller from negotiating with any other prospective buyer for an agreed time period. This lockout period allows the buyer some time to consult with experts and carry out due diligence.
To help the buyer make the final decision, certain confidential information, which may be considered trade secrets, might have to change hands. If this information is the primary asset of the business, the seller will understandably be hesitant to hand it over before arriving at a binding agreement. So with a confidentiality agreement, the seller can prevent the buyer from disclosing it to anyone else, or using the information for any purposes other than to assess the purchase decision.
Performing due diligence
It is important that the buyer perform due diligence to ensure that the business is worth the sale price. Due diligence involves the examination of the following:
- Whether the seller possesses titles to all intellectual property included in the sale.
- Whether the seller possesses titles to all the property that are included in the sale.
- Insurance policies of the business.
- Key contracts and their continued enforceability with third parties.
- Compliance with all required statutory regulations.
- Companies House records.
- Reports from surveyors and accountants.
- Existing employment contracts and the impact of Transfer of Undertakings Regulations.
A suitable contract must be drawn if any of the sellers are to continue in employment in the business.
Sale agreement The sale agreement sets out all the details of whatever has been agreed between the buyer and seller. If it is a business transfer, the document will be fairly long because it will have a lot of detail about which assets and liabilities are excluded or included in the sale. Also, the buyer may want to include a lot of warranties into the agreement by the seller would want to keep the warranties to the least number possible. The size of the agreement may ultimately depend on the negotiating power of the buyer and seller. A letter of disclosure
For an agreement with warranties, the seller may want to mention specific exceptions to the warranties. This can be done in the form of disclosure letter, which prevents warranty claims. Shareholders’ and directors’ meetings
If a limited company is involved in the transaction, either as a buyer or a seller, they will need to carry out some formal meetings to approve different aspects of the transaction.
A transfer of shares usually also requires a deed of tax indemnity. This is a document which mentions that the tax liabilities before the date of transfer will remain with the seller.
If you need more advice on buying or selling a business, please get in touch with London commercial property solicitors at Smart Legal.