Early Exit Strategies
An average commercial or retail business will enter into a lease for a period of 5-10 years. During that time, our businesses will be impacted by a variety of internal and external facts – and we can’t anticipate them all. Consequently, it’s not uncommon that a business will come to the conclusion that they need to end their lease early. However early lease termination carries a significant financial risk and has the potential to damage your reputation. Our job is to eliminate that risk.
At Liberty Leasing review your lease and come to understand what your business needs. We then build an early exit strategy and negotiate the terms with your Landlord. Frequently we find that the optimal solution for the business is not necessarily ending the lease, but executing a leasing strategy that provides them with some financial reprieve.
How can you exit your lease early?
Subleasing can be a great option. In some circumstances, it is even financially beneficial. For example: Imagine that you no longer need your entire space because your company has recently undergone an internal restructure. You can monetise the unused and wasted space by sub-leasing part of your space to a third party for the duration of the lease term. Now your lease is a passive income stream.
If the optimal solution for the business is to terminate the lease, then we can negotiate a surrender of lease. Normally, a Landlord will require a surrender fee in exchange for ending the lease early. However, Landlord’s also have an obligation to mitigate its loss because of the early end of the lease. We have the experience to balance these rights and obligations. Simply put, our experience translates into the assurance that the terms of your surrender of lease is competitive in the current market and that you aren’t paying too much.
Alternatively, you can transfer the remaining term of your lease to another party through a processed called an assignment of lease. Following an assignment, but subject to the relevant legislation and documentation, you will be released from your obligations under the lease. This means that you don’t have any further liability. For your purpose, the lease has ended.
Are you selling your business?
If you are selling your business, you will be required to assign your lease to the purchaser. A lease will almost always contain a requirement for Landlord approval and consent to the assignment. It will also set out conditions which must be satisfied before the Landlord is required to give its approval. We discuss the administrative process involved in assigning your lease here.
Whichever early exit solution meets your business needs, we carry take-on a comprehensive transaction management role. This includes preparing your application for Landlord consent, negotiating the key commercial terms, liaising with relevant stakeholders, facilitating the return of your bank guarantee and oversee the parties’ disclosure obligations.
We do the heavy lifting (administratively speaking) so that you can focus on more important things, like Whiskey Wednesdays. Or, for the more ‘responsible’, focusing on your future business success.