Corporate Acquisition of a Trade Counter Business

The following instruction demonstrates the broad range of expertise Carter Jonas are able to offer a client during a corporate / property acquisition process.

The Trade Counter Team advised one major client on a corporate acquisition of a trade counter business which had been placed into administration.

The work involved detailed property inspections of several properties - reporting initial findings back to the client.

Through detailed examination of the leases of the properties, only three depots were identified as being of interest to the client.

Two out of the three depots were in an advanced state of disrepair and there were no Schedules of Condition attached to leases. As such, the purchaser of the business could be inheriting a substantial dilapidations liability for each unit if leases were assigned.

As part of the acquisition process, short-term license arrangements were entered into with the receiver in exchange for acquiring the goodwill, coupled with stock relating to the business. During the license period, the Team undertook two locational property searches to identify new alternative premises strategically better-placed to enhance trade and leases were now to be based on attractive lease terms, one to include a nine-month rent free period and both being within recognised trade counter locations. In addition, each lease made provision for the attachment of a Schedule of Condition in order to limit future dilapidations with the documentation being collated by our in-house building surveying department.

During the acquisition process, Carter Jonas' Planning Department submitted a Planning Application for one particular unit, as the local planning officer considered the client's use to be within a Sui Generis land use category, as opposed to the general B8 Storage and Distribution Use Class which is also sometimes relevant to our client's operations.

For the third property, the lease was coming to a natural end and the landlord was seeking a rental increase of circa £8,000 per annum. The Team presented a compelling case, based on local market evidence, that there was scope for commencing on a new shorter lease term to incorporate regular break options, limiting the rental increase to only circa £1,440 as well as arranging for a Schedule of Condition to be attached to the lease.

The Trade Counter Team was able to assist in co-ordinating an acquisition process which proved highly beneficial to our client in terms of taking avoidance measures over taking on costly dilapidations liability, relocation and setting up of two alternative depots, having negotiated highly competitive lease terms, securing appropriate planning consent, and engaging our building surveyors to limit any claim for dilapidations that may be received at a later date.