Rather Than Buyer Beware, A Case Of Seller Beware

27/09/2010 by info.

I was looking at a business forum today, someone was asking for help as his ex landlord was pursuing him for £13,000 in unpaid rent.

Basically his story was that he was buying another business and wanted to complete quickly on that purchase, so allowed the potential buyer of his business to start trading from his premises before the lease was assigned. Unfortunately the new owner of the business did not pay the rent hence the landlord asking the lessee to pay it.

Now this person was incredibly stupid, and the possibility is that his finances could be ruined because he wanted to rush the process of selling a business too quickly.

You should never allow a prospective new owner to start trading from your business before they have completed.

Unknown to me one of my clients did similar thing a year or so ago. I was talking to this client about the fact that they would be out of their business in a week’s time and they mentioned. “Oh I’ve been out for the last 2 weeks he has started trading already!” Now fortunately this owner suffered no loss, but if I had known this was their plan I would have advised against it.

I would suggest that it would even apply to training a new owner or letting them too much about your business. The very first offer that was made for one of the businesses I was selling was withdrawn without explanation. I spoke to the owner and she said that she was angry at him as she had spent hours and hours and hours with him telling him all about her business. No doubt she told him things he didn’t like.

So if you are selling your business, think twice before allowing a potential buyer inside knowledge prior to completion, it could mean that your sale could collapse. Or even worse never allow them to start trading without a legally binding agreement in place drawn up by a solicitor, as it could leave you financially ruined.

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