We want to buy a hotel but there is a manager with a 2 year contract in it
I am going to look at a hotel for sale and have found out that it is being run by a manager. The owner tells me the manager still has 2 years on his contract.
What are the implications of buying an ongoing business with a manager who has a contract for another 2 years? Do we have to keep him until his contract runs out? It might actually work out quite well for us, but I wanted to understand whether we had any options.
We would want to live and work in the hotel but it would not be possible while the manager is still there. So, if we sold our property in good time, we might find ourselves in a position where we had to rent until the manager’s contract ran out, and so the hotel would not be our primary residence. I do not know if that causes any other problems. Plus the issue of a manager who knows his time is running out might not be keen on keeping up standards….....
It is a situation I have never come across before (someone selling an ongoing business with a manager).
Will the current owners have to pay any sort of business tax on the sale?
It is not their primary residence either, so I guess they will also have to face capital gains??
I’m just trying to understand their implications for when we negotiate a price.