When a business owner sells a company that also includes commercial real estate, the transaction involves much more than putting a building on the market.
The property is only one part of the deal. The business may include equipment, inventory, employees, customer relationships, contracts, goodwill and years of established cash flow. Each of those items can affect the overall value and how the transaction should be marketed.
A commercial real estate broker can determine the value of the land and building, but valuing an operating business requires a different set of skills. A business broker reviews financial statements, identifies the company’s true earning potential and helps determine what a qualified buyer may be willing and able to pay.
Confidentiality is also a major concern. Most owners do not want employees, customers, vendors or competitors to know the business is for sale. Business brokers are accustomed to screening buyers, requiring confidentiality agreements and controlling when sensitive information is released.
Financing can be another challenge. A buyer may need a combination of commercial financing, SBA lending, equipment financing and seller financing. The purchase price may also need to be allocated among the real estate, equipment, inventory and goodwill.
These transactions can be structured in several ways. A buyer may purchase both the business and property, purchase the business and lease the building, or bring in a separate real estate investor. An experienced business broker can help the seller evaluate those options rather than treating the opportunity as a standard real estate listing.
For many owners, the business and property represent decades of work. The building has value, but so does the company operating inside it. Hiring someone who understands both sides of the transaction can help protect that value and improve the chances of a successful closing.
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