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looking for some tips on the best way to lease to own a small business

looking to lease/purchase a small business and also not put down such a large amount as where id be right away taking over full responsibility of all the duties of the business

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Signal Hill Holdings, LLC
General Partner
CT

Leasing a business is but one of many ways to accomplish a bigger picture goal of "taking over a businss" which many have asked me about over the years.

Purchasing a business with little at risk falls and phasing in control is more or less in the same category. Leasing a business is the shortest of short term solutions to taking over a business and likely has to be morphed into another deal structure at the end of the term. This can come in the form of an option to buy the business during the lease term and ending when the lease term has expired, and subsequently having to put up or shut up to complete the purchase.

Without going further into the details, gradually phasing into control of the target, regardless of technique used, is a viable strategy as long as you find a willing seller, which is usually the big challenge and takes a healthy does of luck to pull off.

That is a far bigger numbers game that just finding sellers. My recommendation is to the consider that strategy a subset of other strategies to acquire a deal.

Rock
www.lbo-deals.com

Sep 15, 2015
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The BAF Group LLC
MD

This question has been answered several times this question has been posed and answered several times over the past several years. Leasing is something you do with Real Estate; it is not something you obtain for a business. If you lease a retail storefront and your business fails, the Landlord has the ability to take the retail space back and lease it to another Tenant. Certainly, it can take some time to get a new Tenant into that space, but by and large, Tenants do not destroy the Real Estate. After they leave, the Landlord still has something to lease.

Businesses are wholly different situation. The success of 99.9% of all small businesses are predicated on goodwill. Someone who leases a business, someone who comes into the business with very little invested, has very little to lose. And if that person has very little to lose, they are likely not to be motivated by the loss of that investment, where the business in general. In that kind of a scenario, goodwill can be destroyed very quickly, leaving the Seller to struggle to turn a business around and rebuild it. Building goodwill can take years, when you start from scratch. Once it is destroyed, rebuilding it can take 10 times as long.

I am afraid that it makes no sense whatsoever for a business Owner to look at "leasing a business". The Owner took a lot of risk when he started the business; he should not have to take that same risk in selling it.

Jul 27, 2015

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