Selling business with real estate

It is not unusual for businesses to be acquired along with real estate. Business owners often face a dilemma when deciding whether to keep the real estate and sell just the business or sell both at the same time. 

A seller must take into account lots of factors, including the value of the property, tax liabilities, and the current market conditions. In some cases, the seller may choose to rent out the property or sell it to a third party if the timing isn’t right. 

When selling a business with real estate, you usually have several options:

1. Sell the property as part of a business. Depending on the deal structure, real estate could make the business more appealing to some buyers, while others prefer leases over purchases. Real estate will greatly increase your chances of selling the business if you give the buyer a choice. Also, if the buyer purchases the property along with the business, lenders are more likely to approve financing for the buyer.

2. Hold the property and lease it to the buyer of the business. In this case, you will receive rental income from the property. In the event the buyer has a limited cash reserve or needs it for business expansion, a lease with a purchase option could be a good option. Leases can be structured in a variety of ways to align interests among the parties.
3. Sell the business first and then sell the property. Depending on the circumstances, real estate is not always an attractive option for some business buyers. 

Whichever option you choose, the value of the real estate as well as the business must be determined separately.

Transactions involving real estate require careful planning and preparation. Early planning gives you the opportunity to consider various options which will enable you to structure the deal more effectively and maximize the value of both assets. 

If you own a business with real estate consult with an experienced, licensed business broker.