What Lease Information Should I Prepare Before Selling My Business?

Start with the complete lease file

Create one folder for each premises, even if several locations use the same landlord. Start with the fully executed lease, not a summary or an unsigned draft. Add every amendment, renewal, extension, rent letter, consent, waiver, estoppel certificate, notice, memorandum of lease, and side letter. Include documents that changed the premises, term, rent, permitted use, operating hours, signage, exclusivity, assignment rights, or repair responsibilities.

Label each document with its date and purpose. If you cannot find the signed version, keep the best available copy and note what is missing. Do not silently treat a draft as the governing lease. A buyer and its advisers will need to understand which document controls and whether later correspondence changed the practical arrangement.

Build a lease schedule for each location

Use a consistent schedule with fields for the legal tenant, landlord, premises address, usable or leased area if stated, commencement date, expiration date, renewal periods, notice deadlines, permitted use, and any exclusivity or co-tenancy terms. Record the current base rent and the method used to calculate increases. Add security deposits, prepaid rent, landlord credits, tenant-improvement allowances, and outstanding balances.

Separate fixed rent from variable or pass-through amounts. Common examples include common-area maintenance, taxes, insurance, utilities, percentage rent, marketing charges, and maintenance reimbursements. The schedule should point back to the relevant lease section or amendment. FASB’s illustrative lease disclosures identify remaining term, extension and termination options, variable payments, and lease expenses as distinct information categories, while also noting that the appropriate information varies by arrangement. [1]

Map renewal, break, and termination options

For every option, record who may exercise it, the notice period, the required delivery method, the exercise deadline, the resulting term or rent formula, and any conditions. Mark whether a deadline has passed, is approaching, or is not yet calculated. Include options to renew, extend, terminate, expand, contract, relocate, or purchase if the lease contains them.

Do not describe an option as a guaranteed continuation. A renewal may require timely notice, compliance with the lease, or agreement on terms. Likewise, a break clause may have conditions such as payment status or specified notice. Official UK guidance explains that a commercial lease generally continues until its end date unless a break clause or another agreed route applies, but the legal effect depends on the particular lease and jurisdiction. [2] Have counsel check the dates and conditions before sharing a definitive conclusion with a buyer.

Review assignment, subletting, and change-of-control language

Flag every clause dealing with assignment, subletting, a sale of assets, a transfer of ownership, a merger, a change in control, or a change in permitted use. Note whether notice, consent, financial information, a landlord form, a new guaranty, or lender consent may be involved. A stock sale and an asset sale can interact with lease language differently, so record the wording rather than assuming the transaction structure answers the question.

Assignment, subletting, surrender, and a new lease are different arrangements. In an assignment, a buyer may take over the tenant’s rights and obligations. In a sublease, the original tenant may remain responsible to the landlord. GOV.UK describes assignment as passing the lease to another party and says permission may be needed, while it notes that a subletting tenant can remain responsible for rent. [2] These are useful preparation distinctions, not universal legal rules.

An SEC-filed assignment agreement illustrates why the parties may use a written document signed by the assignor, assignee, and landlord. In that example, the assignee assumed obligations arising on or after the effective date and the landlord consented to recognize the assignee. [3] Treat the document as an example of one transaction structure, not a template or statement of what your lease requires.

List guarantees, deposits, and obligations that may survive

Identify personal guarantees, parent guarantees, letters of credit, security deposits, co-signer obligations, indemnities, and any collateral connected to the lease. State who provided each item, its amount or scope as written, its release conditions, and whether a consent or replacement is contemplated. If a personal guarantee exists, do not assume a buyer’s assumption of rent releases the guarantor.

Also capture obligations that are easy to miss: repairs, restoration, maintenance, code compliance, insurance, environmental provisions, exclusivity, opening hours, signage, waste handling, access, and surrender condition. Note whether the business has received a notice of default, cure request, inspection finding, rent abatement, or dispute. Buyers generally need the unresolved item and the supporting record, not a reassuring label such as ‘in good standing.’

Reconcile occupancy costs to records

Compare the schedule to rent invoices, bank payments, landlord statements, general-ledger entries, and the latest financial statements. Explain differences caused by free-rent periods, credits, annual reconciliations, percentage rent, estimated charges, or disputed invoices. Keep a short reconciliation showing the period covered, the record used, and the person who reviewed it.

If your business reports lease liabilities or right-of-use assets, ask the accounting professional responsible for the books to reconcile the lease schedule to the accounting records. Accounting presentation and transaction disclosure are related but not identical. Do not alter accounting entries merely to make the schedule look simpler, and do not present an accounting estimate as a contractual rent amount.

Prepare an occupancy-risk memo

For each location, write a short memo answering four questions: Can the business keep operating there through closing and afterward? What payments or obligations remain? What consent, notice, or document is still needed? What fact is uncertain or potentially disputed? Link each answer to the lease or a dated record.

Call out practical continuity issues such as a near-term expiration, an unexercised renewal, an upcoming rent reset, a required use restriction, a landlord approval, or a planned relocation. If a key location depends on an informal arrangement, identify the missing written evidence. Early visibility gives the owner and advisers time to decide whether to seek consent, negotiate a new arrangement, disclose the issue, or adjust the transaction plan.

Use a controlled review and disclosure workflow

Assign one human owner to maintain the lease schedule and one qualified reviewer for legal interpretation. The source of truth should be the executed lease file plus dated payment and accounting records. Use a checklist to confirm that every location, amendment, option, guarantee, and open issue has an owner. If software or AI is used to extract dates or clauses, limit the task to locating candidate text. A human should compare each extracted item with the source document, check names and dates, and record corrections.

Set stopping conditions before using an automated extraction step. Stop and review manually when a scan is unclear, documents conflict, a clause refers to an attachment that is missing, a deadline cannot be calculated, or the system is uncertain whether a provision is an assignment restriction. Use only a confidentiality setting and access scope that your advisers and transaction process permit. Do not send landlord outreach, accept consent, approve a disclosure, or negotiate lease terms automatically.

Prepare a clean buyer-facing index and keep internal commentary separate from the document copies. Share only the level of detail appropriate for the stage of the process and applicable confidentiality obligations. Counsel can advise on privilege, disclosure scope, consent strategy, and jurisdiction-specific requirements.

Make the lease package easy to verify

A useful package lets a reviewer move from the schedule to the source document and back again. Use stable filenames, a document index, dates, version labels, and a short list of open questions. Preserve the original files and avoid overwriting a lease with a later scan. When a term is unavailable, write ‘not located’ and identify the search performed rather than guessing.

Acquivo is a software platform that delivers the entire sell-side M&A process, valuation, marketing materials, buyer matching, and deal management, on one platform for business owners, M&A attorneys, and boutique investment banks. Acquivo gives business owners the entire sell-side process an investment bank would run, as software, with no success fee. It is user-operated software, so the owner and advisers remain responsible for source checks, permissions, review, and transaction decisions.