At Utah Business Consultants, we’re here to help if you’ve decided the time has come to sell your business. We know this can be a detailed process and you don’t want to get anything wrong, and we’re here to help with everything from assessing the appropriate selling point to screening buyers and much more.
One additional detail that’s involved in some business sales? What will happen to the physical real estate that the business was housed in. If your business is being sold and not continuing operations in the same location, what happens to that property is often an area you have to keep track of with a careful eye. Let’s look at the options that will be available to you here, plus a few situations to consider when it comes to this area.
Generally speaking, you have two broad options when it comes to the property real estate in a business that’s being sold:
- Sell the real estate along with the entire business.
- Sell the other parts of the business, but retain the real estate to use for future rental income.
Now, which of these you choose may depend in large part on which entity actually owns the property. This will be what we discuss in our next couple sections.
In cases where you, the business owner, also own the business real estate personally, as a separate entity, things will be pretty simple and straightforward. This property is solely yours, and any decisions you make with it are completely up to you. Valuation is much simpler here, with limited complications in terms of taxation or other important areas.
In cases where the company being sold owns the real estate, however, the situation is more complex. In these cases, the first thing you’ll generally want to think about is having a third-party appraisal so that the value of the property is objectively clear. You should also talk to your business accountant if your business is a C-Corp, as there might be some taxation issues to work out.
In many cases, business buyers will prefer to acquire the real estate as part of the sale. Others will prefer a lease, however, and there may be cases where you can provide this lease to the new buyer. This lease has to be very strong, though, including specific details on who will handle repairs and various costs or expenses. The ability to show a good lease that’s generating income will be an important factor down the line if you do choose to sell the property to another owner eventually.