Leasehold Business

[ChrisAITY]

Hello Business Experts..

Can someone please explain a leasehold business??

If it says leasehold business at £99,950.. does this mean upfront payment and then pay extra for lease and rates etc etc.. or £99,950 leasehold over 15 years (as it says the lease is 15 years)..

It confuses me.. I know it sounds stupid..

Thanks,
Chris

 

[liquidauctions]

It means the property that the business is located in isnt part of the deal so you will have to pay rent etc so basically you are paying for goodwill and stock etc

 

[S-Marketing]

If you are looking at businesses like that also consider that profit is usually quoted when the business is advertised, but they often forget to mention its gross profit.

 

[ChrisAITY]

Right OK.. I think I understand now.. Thanks

 

[Rhodes100]

Hello Business Experts..

Can someone please explain a leasehold business??

If it says leasehold business at £99,950.. does this mean upfront payment and then pay extra for lease and rates etc etc.. or £99,950 leasehold over 15 years (as it says the lease is 15 years)..

It confuses me.. I know it sounds stupid..

Thanks,
Chris

The £100k is the amount of money upfront you pay for the ongoing profits of the business, the right to trade in that location plus the purchase of any equipment/fixtures and fittings in the business.

It is possible that the businesses goodwill is not worth £100k, but that is for you to discover.

When you buy the business you may in the future want to sell the leasehold and is may be worth more or less than £100k depending on whether you increase or decrease the profits.

Usually stock is payable in addition to this figure quoted.

You then have the right to trade from those rented premises for a minimum of 15 years provided you pay the rent to the landlord. After which time you will probably be able to renew your lease.

Remember you will also have solicitors fees, surveyors fees and perhaps finance charges to pay as well when you buy it, and you should also ensure that you have enough money to purchase the stock and have sufficient working capital to run the business.