Best Surprise Is No Surprise

NEW YORK CITY-Potential buyers in corporate acquisitions go to great lengths to understand the real value of a company prior to acquiring it. They conduct in-depth and sophisticated due diligence, and their attorneys and accountants thoroughly investigate a target company’s legal obligations and financial status to gain a clear understanding of its assets and liabilities.

Among the documents typically reviewed are leases, subleases, licenses and/or other occupancy agreements that relate to the locations in which a target company conducts business. And while the rent and other economic provisions of these agreements are typically reviewed in the course of deciding whether a company is a wise investment, it is important to pay attention to other clauses in a lease that can compromise the value of an acquisition.