Including Office Space as Part of a Law Firm Sale
August 6th, 2019
Small-firm owners and solo practitioners looking to sell their law firms frequently believe that their particular office space—whether owned or leased—significantly enhances the value of their practice. They usually base this belief on the office’s superior location or their upscale furnishings and design.
Is this belief founded in reality? Sometimes. But , often, a seller’s office space can actually hinder a sale.
When Office Space May Help or Hinder Selling a Law Practice
There are occasions where superior office space can either increase the value of a practice or, at a minimum, make a practice more attractive and easier to sell. This is especially the case for potential buyers who have inadequate space to take on the seller’s practice or, coincidentally, have their own lease nearing expiration.
But these situations are few and far between.
Often, possible buyers have absolutely no interest in moving. While there are myriad reasons why, here are two common ones:
- The buyer likes where they are now and already has enough space to absorb the seller’s practice.
- The buyer is locked into a long-term lease that would be costly to break. (Indeed, conditioning a sale upon purchasing or leasing existing space will make most practices less attractive and more difficult to sell.)
Bottom line: Don’t assume anything about the impact an office will have in a sale scenario. Depending upon the buyer, it can cut either way.
Are You Looking to Retire Soon? Do You Have an Expiring Lease? Heed These Words.
If your lease is soon expiring and you think it is possible that you may want to retire within the next few years, here are some final words of advice:
Do not sign a lease for a term that extends beyond the amount of time you want to practice.
If you do, you may have to reject an appealing buyer who doesn’t need your space. Or, just as bad, you may be forced to eat the remainder of a lease when doing a deal with an appealing buyer. Either way, your exit strategy will be less favorable than what would otherwise be possible.
Categories: Selling a Law Practice