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Suggest a titleCan I Sell My Business and Keep the Real Estate?
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Suggest questionAn owner retaining a building or real estate after a business sale is a very common practice we see in M&A transactions. This property can be leased as a source of cash flow after selling the business.
In this video, Ryan Campbell, CPA, CGMA, CVA, Partner in Charge for our Pensacola office , talks about the valuation process, including cash flow adjustments and more.
If you have any questions about business valuation, please reach out to our team to discuss your options.
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Transcript from YouTube captions. May contain errors.
so one major aspect in the m a transaction is real estate a lot of times companies own or either inside or outside of the company real estate and it's usually a very significant uh wealth factor to the exiting owner now the question is can I sell my business and keep my building absolutely we see this a lot of times as owners and it can be a really great source of cash flow after the transaction uh somewhat of a retirement payment that they can receive after sale now in this structure there's a couple of factors to consider as we're doing this one is if the building is held within the company or held outside of the company either personally or in a related LLC if it's within the company then typically during our valuation process we're going to consider the rental payments of the building and that is going to reduce the ebitda or the cash flow of the company and therefore reduce the value as we're coming up with it now if the if the owner's intention is to keep the building obviously we're going to want to adjust those ebitda values to remove the cash cash flow effect of those rental payments so as I mentioned an owner retaining a building after the sale is a very common practice we see in m a transactions if you have any questions on that or any other valuation questions you may have please feel free to reach out to our team and we'd be happy to discuss
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