When looking at any list of value drivers for a business the chances are you’ll see location as one of the drivers. That’s because it can make or break a business (and a buy-sell deal).
In retail it’s location, location, location. Pretty obvious. And it killed a deal Jessica was working on when the landlord wouldn’t give an adequate lease for a location dependent business.
What about manufacturing and distribution and service? There may not be customers coming to the business but size, power, shipping, etc. are all important factors. Plus, access to workers. Which is why when a business must move (outgrown their space for example) there has to be attention paid to where employees live and how many will quit because of the new commute.
As mentioned, the lease is part of this. Another deal never got off the ground because the landlord wanted a year-to-year lease (dreams of redevelopment), which doesn’t work when the business buyer has a loan and can’t be forced to move while owing money (it’s darn expensive to move most businesses).
A good location, with a solid lease, and a friendly landlord is definitely a value driver. The opposite is a value deflator.
“I find television very educating. Every time somebody turns on the set, I go into the other room and read a book.” Grouch Marx
