As we go deeper into the buying process, we start to uncover more challenges from our seller and encounter some of the wrenches they are tossing our way. When we last left off in episode three our team was knee deep in due diligence for our buyer, had already penned and signed the Letter of Intent (LOI) and was grappling with this mysterious business broker.
As our team irons out the details on a pivotal deal changing lease for our buyer, the seller’s broker friend starts to stir the pot and our attorneys reach for their running shoes as our team gets ready to jump our first big hurdle.
Even though everyone’s eyes roll, worry not, our attorneys have dealt with his type before, but with every case being different will the other obstacles on the horizon be just too much for our buyer?
Listen to episode 4 of the Behind the Buy series.
Full Podcast Transcript
NASIR: Welcome. My name is Nasir Pasha.
MATT: And I'm Matt Staub.
NASIR: This is our fourth episode on Behind the Buy series where we're walking through the process of buying a business with our client and this one is a doozy. I think this is our first real obstacle and this is also during our due diligence period right after we signed the letter of intent but before the purchase agreement's kind of finalized.
MATT: But this is realistic and an actual transaction, too. Now we've kind of gotten to the substance and the meat of this transaction. Like you said, there's a lot of inter-working pieces and components that are going on. So I think this one's a great listen if someone really wants to understand what's entailed in the purchase of a business.
NASIR: Right. And some of these things, you just can't predict. But in a lot of ways, it's totally predictable. That is you're going to get things that you're not going to expect. There are some vocabulary words we use here. We want to make sure we define beforehand. First one is earnest money and third-party escrow. In this call, we start talking about how we're going to be depositing a more sizable deposit with a third party escrow as an earnest money. And again, this is not dissimilar from buying a house when you're buying a business. It's kind of the same way. You're actually depositing cash usually with a third party. They're called the escrow agent or the escrow officer, and they retain it in their bank account in trust. They will release those funds upon instruction from both the buyer and seller or as otherwise directed in the actual purchase agreement.
MATT: The next couple of terms we have, we have asset purchase and then we have stock purchase or also equity purchase kind of used interchangeably. So I think we've talked about this in the previous episodes, but an asset purchase in this context would be a situation where you're kind of picking and choosing the items you want to buy from the seller kind of an a la carte way of looking at it. With a stock equity purchase, you're buying everything. That's what we're talking about when we say asset purchase or versus a stock or equity purchase.
NASIR: The next couple of terms are healthcare-related. Our buyer is buying an urgent care. We do have to cover some health industry-specific terms just to make sure that everything is communicated properly. There's just two here. One is CLIA waived testing. That just refers to the urgent care where they have to be certified by CLIA which certain labs have to do that. We find out that, okay, this is not a lab that requires that kind of CLIA license. The reason that's important is because whether or not we need to transfer that license or get a new license when you're buying the business. The second item is also kind of related to that in the sense we had to see whether we need to transfer any in-network provider agreements as well. Most health care facilities are in-network, meaning they have some kind of contract with an insurance payer to be reimbursed at a certain rate. Whether or not these can be transferred or assigned or needs permission from that insurance payer if there is some kind of sale, the business is very specific to that contract. We talk about making sure we have access to those provider agreements and taking a look at that. Our clients were pretty familiar with that process and so they were going to actually do that themselves.
MATT: The last few terms we have are all related to lease, everybody loves lease talk. We mentioned something about – I think we say at lease contingency. I know it's not really a term of art, but basically what we're talking about here is if there's a contingency in the purchase agreement that I guess in this case, the lease is going to – There was the exercise, the option to extend or they're able to extend. We'll get into the why that's relevant later on here. And then lastly, we have personal guarantee. Again, this deals with the lease. It's just if you're signing a lease as the tenant, sometimes the landlord requires you to sign what's called a personal guarantee, meaning that if you execute it on behalf of an entity, you personally, whoever is the one doing the guarantee, you're going to also be personally responsible for the terms of the lease, mainly the payment of the rent every month.
NASIR: Right. That's our vocab for the episode, not too heavy, I think. But stay tuned. Let's listen to this call and we'll come back with our commentary.
MATT: All right.
NASIR: Okay. Thanks for getting on. It's been about a week since we last spoke. I know a lot has happened. We may need to just go start from the beginning, from our last recording, which I think again was about a week ago.
BUYER: Yeah. It seems like forever ago.
MATT: Right. So I can start. As you know, you sent our draft letter of intent. and signed right away. That's great. The next step was to get some basic financials, including the lease. But the business broker came into the picture and seems to have held up any document disclosures.
BUYER: Yeah, the seller was in fact about to send it to me and then he called me saying that his broker said that he shouldn't disclose anything until we get the purchase agreement done. By the way, I found out yesterday that the broker is a friend. So I don't know if that matters or not.
NASIR: Okay, that actually explains a lot of things and frankly, doesn't surprise me.
MATT: He just seemed to be getting in the way of the transaction rather than facilitating it.
NASIR: Right. We should find a way to minimize his role if we can.
BUYER:Yes. If we can do that, I feel like that would be best.
NASIR: Okay so going back. The broker came into the picture. Even though we weren't close to doing a full purchase agreement yet, they wanted to close quickly as if it's automatic. I think we were able to buy some time and placate his broker friend, so that's good.
MATT: By the way, I actually looked him up to see if he was licensed. You could guess, but in California, business brokers should technically be registered with the Department of Real Estate. He had not come up as licensed in California. He's either just one of those unlicensed brokers, which again, is pretty common in the states that don't require it or maybe just a friend that has a business background.
NASIR: Either way, whoever he is, we just have to keep an eye on him and make sure he doesn't kill this deal unnecessarily. But anyway, we've deposited the money, right? 15K?
BUYER:Yes. I transferred those funds yesterday.
NASIR: Okay, great, perfect.
BUYER:That money is fully protected, right?
MATT: Yeah, it is. We basically amended the LOI to include an earnest money deposit. It's either going to be refunded to you at the end of the 30-day period or it will be applied towards the purchase price when we sign the purchase agreement.
NASIR: Yeah, and usually we would consider a third-party escrow. I think we talked about this last time. Given that it was a small amount compared to the purchase price itself and we need to get this done quickly, is it acceptable risk just to transfer it directly? Obviously it helps that he's a licensed physician.
BUYER:I'm fine with that. I really don't think he's going to steal it or anything.
NASIR: Right. That does remind me in speaking to the broker, I do think that they're gonna want a more substantial deposit at the signing of the purchase agreement. In that case, we definitely should use an escrow because it's probably gonna be a sizable amount. I don't know how much but probably I would say 10%, 15% or so of the purchase price and of course, protect your funds, but it's more about also keeping the transaction moving along. There's something about having that money locked up in escrow and it doesn't get unlocked until the transactions close that kind of pushes things for the seller.
BUYER:Yeah, definitely. That makes sense. What would be our next step then?
NASIR: We're still determining the structure of the acquisition. But to answer your question, the next step is to get this purchase agreement done. I think we've narrowed down your decision on how to actually structure this thing. We've looked at in-network provider agreements and for the most part, as expected, they have some kind of procedure to actually assign these agreements. Despite that, even if there's a change of control so if you actually do an equity purchase, you still have to get their consent. There's really no advantage of doing it as an equity purchase. Most likely, an asset purchase is what makes sense here. I would also note that if your partner has his own provider contracts already for his practice, then he needs to look to see and compare the rates, because oftentimes, and this existed in these contracts, the payer is going to have the option in this circumstance to pick and choose which contract applies because it's by tax ID, usually not by facility. So that's something that you need to look into as well.
BUYER:Oh, okay. I can look into it or I can send you his current contracts with the payers and we can see what that would mean.
NASIR: Yeah, absolutely. We're happy to do that as well.
BUYER:I'll look at it, too, either way, but I'll send you a copy. So let's see, is there anything else?
NASIR: Based on that, though, let me go over a couple more things. We shouldn't do a stock purchase for another reason as well, because I confirm there's no special license for urgent cares. They are doing CLIA waived testing anyway, so you don't need that certification. That's also not an issue. What else?
MATT: I also looked into the lease agreement they provided. It does require consent to sign the lease, but it doesn't have a change of control provision. If you were to do a stock purchase, you wouldn't need the landlord's permission. I don't think it's enough to not do an asset purchase if we can.
BUYER:I'll defer to you guys. But that's what I'm thinking. An asset purchase.
MATT: Okay. I do want to note a couple of things in the lease agreement. It was a three-year lease, but they only have about five months left. There's also a personal guarantee.
BUYER:Wait, five months?
BUYER:I'm pretty sure he said he had five more years on the lease and obviously five months wouldn't really work.
MATT: Yeah, he might have gotten mixed up here. So he did have a five-year option. But we need to check if he missed the deadline because he was supposed to give notice to exercise that option six months prior to the end of the term. Unless he did that, the lease is going to terminate in five months.
BUYER:Okay. So he missed it?
NASIR: We don't know that for sure. We should find out directly from him. I think
MATT: agrees. I do suspect that he probably did miss it. The only reason we're thinking that is because it's such a big deal. It's something that you would probably have included in the disclosures. Also, we've already seen this guy's not the most organized of business owners. So I suspect he did.
BUYER:Right. But this is a huge issue and the location is part of the reason why we're buying it.
NASIR: I get it. We need to act quickly. This goes so we need to get this purchase agreement done as soon as possible now, I think. In particular, we need to start you having that conversation with the landlord. That's really the only way that we're going to be able to determine whether you're going to be or to keep the lease, whether he's interested in another tenant or what have you. We need to get some background information for that. But we really can't do that. And it's not typical that makes sense to do that until a purchase agreement is actually signed. That should be our priority. And what's nice about this is that it's a typical strategy to actually put the lease assignment as a contingency on closing. This allows us to sign this purchase agreement, but still have a way for you to back out in case you're not able to work something out with the landlord. I think we can work this out. We'll make this part of the transaction. You just need to get the consent from the landlord and make sure you get that five-year extension, regardless of whether he's missed the deadline or not.
BUYER:Well, I mean, in that case, maybe I can negotiate some better rates because frankly, he was overpaying for that space. It's a great location, but it's not set to the market.
NASIR: Okay, that's actually really good because we can even possibly use this then to our advantage with the landlord. There's always some risk, you don't want to lose the space. But if what you're saying is true, given the market, I think we should be able to close that then.
MATT: Yeah, it works out pretty well, actually, because the five-year option has a 5% escalation of the rent. If you're saying that it's already too high, it would be better to go to the landlord and offer your own more reasonable terms, because the alternative is for the landlord to lease a space in the open market, which will be less anyways.
BUYER:This isn't too bad. This is good.
NASIR: Right. I told you, you know, twists and turns. This is how these transactions go. But this is how it works.
NASIR: Besides the lease contingency, we need to include a couple more. We have the provider agreements. That needs to be part of the deal. Second is, there were some liens that we found on the property of the business.
MATT: It looks like he financed some of the equipment because he had a lien filed against his assets.
BUYER:Yeah, it's probably his x-ray machine.
NASIR: We'll look into that. These contingencies, again, just to kind of reiterate how this works. You will not have any obligations to close unless these three checkboxes are marked. You have the lease, you have the provider agreements and this UCC line x-ray machine or whatever equipment is removed. If for whatever reason you can't negotiate with the landlord, then you can terminate and get your deposit back. Of course, if all those three checkboxes are marked, then you'll be obligated to move forward. But by that time, you'll be ready to go anyway.
BUYER:That's awesome. That's perfect. I'll explain that to my partner later today.
NASIR: Perfect and by the way, speaking of him, you should mention that I think
MATT: mentioned that there is a personal guarantee in the lease. It's unlikely that the landlord is going to remove the old personal guarantee unless it's replaced by a new one. And obviously the seller is not going to agree to be held responsible for a lease that he's no longer occupying. I would just make the assumption that either your partner or you or both may have to actually personally guarantee this lease.
BUYER:Yeah, of course. That makes sense. Both myself or Dr. [beep] we don't have any problem with that.
MATT: All right. Very good. Here's what we're gonna do. We're gonna structure this as an asset purchase. The seller may not prefer this, obviously, but it's pretty common to do it this way. He shouldn't have an issue.
BUYER:Okay, great. I'm still waiting on an updated P&L and a balance sheet as well as a few other items, but I'll put it in our shared folder as soon as I receive it and I'll let you know.
MATT: Okay very good. And there are a couple of other items you still need to follow up with him. I just email you a list of what's left.
BUYER:Yeah, no problem. Could you just make sure you email both myself and Doctor [beep]? Because he wants to be more involved as we get closer to the closing process?
MATT: Yeah, no problem. All right. Have a great day.
BUYER:All right. You too. Bye.
NASIR: Thank you, see you later. Welcome back. Wow, that was fun. Lots to talk about there. But before we get into it,
MATT:, let's of course, thank our sponsor. They've been supporting us throughout this entire series and we can't forget to show our gratitude. This is what brings us to all our listeners. Who's our sponsor this time?
MATT: Yeah. It's Pasha Law PC. It's a law firm. The corporate law firm that's in California, Texas, New York and Illinois.
NASIR: Right. And they actually represent clients in buying a business. It's interesting that we're covering that issue on our podcast and at the same time have a sponsor that does the same thing. That's a nice synergy there.
MATT: They must have a good marketing team in place to have the foresight to advertise on this podcast series.
NASIR: Absolutely. I do think they represent both buyers and sellers and also they provide their General Counsel Select service, which is they have some kind of retainer model where they pretty much cover everything and anything that a business may need on a fixed monthly fee.
MATT: Exactly. Worth checking out.
NASIR: Definitely. Now that we got that out of the way, pay the bills, so to speak. This call, there's so much to talk about here. I do want to pick on the broker again. I know we had a whole episode just talking about the broker, but I thought it was pretty funny that again, like very predictable, of course, this broker is not licensed. And I think we foreshadowed that a little bit in our last episode that most states or many states require them to be licensed. They are often not, this is in California. Of course,
MATT: looked him up. He wasn't licensed. But nonetheless, I had that phone call with him and it went decently. We were able to get through that hump. But of course, that's not with more problems coming down the line.
MATT: And for the purpose of this episode, it doesn't rear its ugly head too much. One of the things that stuck out to me was not disclosing the financials until receiving the purchase agreement, which I thought was a little bit odd given that we had – at this point, the letter of intent had been signed. We have some confidentiality provisions in place. The broker's advising his client to not send over any financial information until they get the purchase agreement signed. I could see it but it still kind of struck me as odd given how far along we were in the transaction.
NASIR: Right. But we got past that, with that extra – I think it was a $15,000 deposit, it was a small amount compared to everything. But when I did speak to the broker, it was definitely clear that once we did get a purchase agreement, that we do put in some kind of more sizable escrow or earnest money deposit. In that case, that's where we were very much recommending that we use a third party escrow and we outline this. There were two reasons for this. One is that just protecting the assets. Now, this particular seller, as far as we knew, was a trustworthy person. They're a licensed physician. There's not really a reason for us to think that they're going to run away with it. That's not really what we're trying to protect. Once you give someone the money and there's some kind of dispute, it's possession. It's kind of hard to get the money back if it's not in your possession. But if it's within a third party escrow, that third party can only do so many things as far as releasing the funds. And even if there is a dispute as to whether the funds need to be released, there is at least not in any one party's hand at the least, that no one has a huge advantage over the other for the most part. Even then, we design our purchase agreements, just like many of these transactions go is that it's refundable if the deal doesn't get done, if these ticks are not checked if these contingencies are not met, then the escrow payment is returned. It's a relatively safe prospect regardless of whether or not you have a third party escrow involved.
MATT: Let's just think about it logically real quick. If you're in the shoes of the buyer and you have to fork over this earnest money, and I guess later on there was, like you said, a more sizable amount that was put in escrow. Would you rather be in the hands of the seller or would you rather be in the hands of what's supposed to be an independent third party that has instructions on when it's allowed to release those funds. I think pretty much everyone would choose option B there just because, like you said, if there is a dispute. I'd much rather prefer that the person that you're disputing with is not also holding the fund. This is kind of common sense in that standpoint.
NASIR: We got over that hump with the escrow and so forth. We talked about that. A big part of the call was going through this asset purchase versus equity purchase analysis. I feel like I have to clarify, it's like from a lawyer's perspective, from our perspective, I think it was very obvious that an asset purchase was the best way to go. But this is kind of the part of the process. I think it's important for us as attorneys when we're talking to our clients to walk them through our way of thinking and making sure that it is, in fact, the best idea. We don't want to be too presumptuous. It's not like every transaction is always going to be the same for obvious reasons. For the benefit of the client and in a lot of ways a benefit for the audience, we walk through the process of whether there's an asset in purchase. I don't want to give the impression that – I guess maybe I'm being a little oversensitive because what I don't want to tell the client, look, we're going to do an asset purchase agreement and that's it, that's what you're supposed to do. We kind of like the approach of talking it out. And I think that allows us to have a little bit more of a closer relationship with our clients, because at the same time, we're educating them and making sure that when we go through the process, they feel comfortable every step of the way.
MATT: Right and that's our job. I should say that's the job of any lawyer in these situations, might not always be the case. But I think there are occasions where it is very obvious. Like you said, a lot of times it's more just explaining it to the client, making sure that you provide as much information inside as possible to allow them to make the most educated decision they can and to be fair to everyone here, in this case, we're in the due diligence phase. There's still a lot of unknowns and some of those popped up on this call. We had some information about the lease that our client didn't know about. We talked about the provider agreements as well. And I think there was also a lien on one of the pieces of equipment. Obviously if we knew those from the beginning, it would definitely shift our opinion of whether this should be an asset or equity purchase. But those are things that pop up. That's the whole reason that you might want to keep those options open until you get a signature on the purchase agreement.
NASIR: Right. As you were thinking, I was like there's still so many things that happened in that call, like you said, the lease agreement. I want to delay that a little bit just to kind of get over some of the business items. We talked about this provider agreement. Again, it is specific to this industry. When you're buying a business, there may be certain agreements that are very critical to the success of the business. And a provider agreement or in-network provider agreement is one of those things. So it could be you're buying a business and you want to make sure that the service contracts that produce the revenue are there Or this particular seller has relationships with certain vendors that provide really good cost savings for you on the supplies or services that you would otherwise have access to unless you were able to retain that contract. Part of the analysis when you're doing whether an asset or equity agreement is to figure out if you do an asset purchase, how easy is it to assign that agreement over to the new entity? Because in an asset purchase, it's a new tax ID. In an equity purchase, you are going in the shoes of that tax ID and so unless the agreement specifically says that if there's a change of control or ownership, you need the permission of the other party. Typically, you don't need any consent and you can step in the shoes and do that. Obviously, there might be some downsides in doing an equity purchase for the buyer. That's why we take a look at these agreements that if for some reason these provider agreements or these payors, these insurance companies are unwilling to assign these agreements to a new party, maybe it is better to do an equity purchase. Now, generally, that's not the case. I've seen enough provider agreements that usually there are some options, but sometimes can be quite a number of restrictions. That's one of the reasons why we take a look at these agreements in the due diligence period.
MATT: Yeah, and just going back to the whole asset versus equity purchase options here, or I shouldn't say options, but the asset versus equity purchase, it's not just about the liabilities that might be taken on in the equity purchase, I, for one, have talked about that a lot. Like you said, there's other considerations like if you're going to lose a critical agreement, if it's not transferred over in an asset purchase. That's a big deal or also on this call, there's the thing that came up with the lease. I mean, obviously, for some businesses, location is critical. I think that was the case here. I don't think that's basically what our client said everybody knows this location. It'd be a huge deal not only if you had to go out and search and find a new location, which is going to take time and money, but just the customers knowing where the location is, especially for a business like this, is just so key.
NASIR: Right. Let's talk about this lease. I don't know. This is so typical. You have a small business, they sign a lease with an option to renew and they've been in it long enough. No one's looked at the lease since it was signed and barely looked at. Then maybe the broker or some form contract, no one's looked at it since.Of course, when you have an option to renew, there's some kind of notice period.
MATT:, remind me if it was on this call or not. But I think we did end up confirming that it did miss the deadline. Hopefully I'm not giving anything away. But the fact that he did that is on one hand, not surprising, but pretty scary, if you think about it, when you're about to buy this business. Imagine if she bought this business and there's five months left in the lease and there's no way to continue on with the lease to force the landlord to sign a new lease because now they have the upper hand. This turned out incredibly well, though. I don't think we could have asked for a better result because in this case before the purchase agreement was signed, now we know what the information is. In some ways, because the lease was an above-market rent, apparently, our buyer actually had the upper hand in negotiations.
MATT: Yeah. To me, this whole discussion is just the market dictates all of it. Like you said it in this scenario with our client, at least our client believed it was overpriced so that allowed her to step in and essentially renegotiate terms on a new lease. Let's look at it from another angle. Let's say it was underpriced.
NASIR: That's a good point.
MATT: Yeah. To me, it's kind of like as long as you have a landlord, that's kind of I don't know the right way to put it, a business-savvy landlord. They're they're going to reach out, they're going to be the ones that initiate the contact with the tenant for a possible exercise in that five-year option if it makes sense for them, but they might not reach out to the landlord, which might have been the case here but it was if it's not going to be advantageous. Like you said, you can't just sign a lease and put it in a drawer and forget about it. You have to be aware, especially when you have those options to renew and make those judgment calls at that time. Like you said, it worked out well for our client here. So I can't really complain.
NASIR: Right. This might be a quick tangent, but in case any of you have those kinds of provisions in your agreements or you're negotiating a lease, there's a couple of things that we advise. One is that you can simply just calendar it. If you have a calendaring system, just calendar it and have other people calendar it, et cetera, even if it's long in the future, you can schedule emails. You can do a lot of different things that are long term to remind you to do X. Depending how sophisticated it is, there's also software that manages contracts and things like that. Another practical step and we're talking about practical things here is that you can actually require within the agreement, let's say that the tenant is the one that has the option to renew, that the clock doesn't start ticking until the landlord gives a good faith nudge by giving written notice or vice versa. That way there's some kind of onus on both parties to remind each other that, hey, we need to decide whether or not to renew. In this case, I think they missed it by a month or so when we discovered that it had not been notified. Obviously, a landlord is going to want some lead time to determine whether you're leaving or not or whether you're renewing. In this case, I think it was six months and there was five months left. There's a lot of different things that you can do within the actual lease when you're negotiating it to make sure that you're not missing these deadlines.
MATT: Yeah, exactly. I think that's good general advice for any tenant. But unless you want to add something else, I kind of wanted to jump into the contingencies in the purchase agreement that are discussed. And I think there are three main ones.
MATT: The provider agreements, the lease, which we've already talked about a bunch. And then there is a lien attached to a piece of equipment.
NASIR: That's the x-ray machine I think it was.
MATT: Right. In general, you'll have the purchase agreement. There'll be these contingencies in there typically for both sides and from our client's perspective, these three contingencies are things that the seller needs to satisfy in order for the whole transaction to close. It could be a bunch of different items that are contingencies from both sides, both buyer and seller. But in this case, we had these three. I don't know if there's anything else after that, but these are kind of the three critical ones that we discovered in our first steps of the due diligence process.
NASIR: Right. These contingencies can be lifesavers in the sense that we structure it so that you can get your deposit back and just basically unwind the transaction altogether. They come in handy for sure, especially if, for example, one of the contingencies may not be coming through in the way that you want it, maybe you're satisfied if it doesn't, but it gives you an opportunity to renegotiate as well. For example, let's say that it's a lease contingency that requires at least something satisfactory to the buyer or a certain amount of rent or a certain number of years. Let's say that the buyer wasn't able to renegotiate that, maybe they dropped down to the purchase price or something similar.
MATT: Yeah. In this case, with the contingency attached to the lease, was that a new lease be executed between the landlord and I guess the buyer That's something that has to happen or else as we mentioned before, our client was very attached to the location of this which makes sense given the nature of the business. That's one thing. The lien on the equipment that's pretty common. There might be liens that are filed against certain assets.
NASIR: Yeah, any kind of loan, if there's like a business loan or anything like that, usually will have some kind of lien as well.
MATT: Yeah. That's fairly common. Always should do a UCC search during this process too just to see what comes up. I'm positive we did that. I don't know if it was something that the seller might have done as well. I can't really recall.
NASIR: I think they gave us – I think we did it both times, both at the time of due diligence and towards the end of the transaction as well. I think I just gave something away. Maybe I should scratch that out. We forgot to mention this again, this buyer. You could tell she was a little surprised about the whole five months thing. She was surprised, but she still handled it pretty well. And I think part of it was the fact that we were able to present a solution pretty quickly, too. Well, I think she came up with the fact that she gave us knowledge that the lease was already above market, made it really easy. Like you said, if it was the opposite, I'm not sure how she would have reacted. It would've been a little bit different.
MATT: Yeah, I would have been a much bigger deal. The one thing I was, I guess I shouldn't say surprised with that she was perfectly fine that there was a personal guarantee that was likely gonna be – There was one to the active lease. But like we were explaining to her, it's most likely the landlord is going to require that for a – and just to reiterate from before, it's basically she has her entity that she's formed. The landlord is going to require her or possibly her and her partner to personally guarantee the terms of the lease. And so she was fine with that. And obviously, if she's confident enough to purchase this, to go through the transaction itself and you're going to have faith in it and you're going to think that you're not going to have any issues over the term of the lease, too. I think that makes sense. Sometimes people are a little standoffish or reluctant to sign a personal guarantee. But sometimes it's a dealbreaker. There's no way that the landlord is not going to allow some sort of personal guarantee. But it's a case by case situation.
NASIR: Yeah. Again, the market dictates that. Whether or not the business has history and if there's an existing personal guarantee it's always unlikely no matter who the buyer is that that won't continue unless there's a big buyer than they do have some kind of corporate guarantee. Again on the lease, it's a big topic. The last thing on the lease I think is in this case, like we said, we did a new lease. But if it was not five months left, if it was another five years or even a few years. We probably just would've done an assignment where the existing terms of the lease would just be assigned to the new entity and that's how that would work. And that's how any other contracts that you wish to assume would work. Like we said at the top of the commentary is that usually, you need the other party's consent. That document is usually signed by three parties, both the buyer seller and that third party.
MATT: Sure, yeah.
NASIR: Well, I think that's it. We of course, are very active on all our social media, Facebook, Instagram, Twitter. Please reach out to us if you have any questions or comments, we want to hear from you. We love hearing from you in fact, especially if you want to submit any questions, you can do that through our social media pages or also if you want to email us at firstname.lastname@example.org if you want to mail us a written letter, what should we tell them, Matt? Just don't do that maybe?
MATT: I guess they can, it would eventually get to us. But who knows how long that's gonna take? Email, I can almost guarantee will be faster.
NASIR: Almost guarantee? Almost.
MATT: You never know.
NASIR: All right. Well, I think that's it. Don't forget to leave a very positive review on the podcast channels, how you listen to this podcast, whether it's Google podcast or Apple podcast or Spotify, we'd like five stars and we like 10 stars, nothing else, just either those two options.
MATT: And if you want to create your own podcast ranking website, just whatever the maximum number is, that's what we want to receive.
NASIR: And if you want to rank us, just put our podcast as number one and really you don't need to list any other podcast.
MATT: Yeah, I think that's fair. That's a fair request, it's reasonable.
NASIR: Very good. Well, tune in, of course, next week or not next week. Tune in next call I should say, or next episode. There's more to come.
MATT: Yes. This isn't the – I want to say the calm before the storm because it wasn't necessarily a calm, but it's definitely going to ramp up a bit from here.
NASIR: All right. Thanks for joining us.
MATT: Yup. Keep it sound, keep it smart.
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