Discover the benefits of bundling your business sale with real estate.

One common question that arises when selling a business is whether to include the real estate in the deal or sell it separately. We’ll present the advantages of selling both the business and the real estate together. By doing so, you can potentially increase the overall value of the transaction.

When it comes to selling your business, incorporating real estate into the deal can create additional value. Let’s consider an example to illustrate this point. Suppose your business is valued at $2 million. If a buyer purchases only the business, they may secure a loan amortized over a 10-year period, resulting in higher annual payments (let’s say around $150,000).

Now, imagine your real estate is also valued at $2 million. If a buyer were to acquire both the business and the real estate, it would become a combined $4 million deal. In such cases, the bank typically blends the two loans and offers the buyer a longer-term loan, typically around 25 years. Consequently, the buyer’s annual payment may decrease to, let’s say, $110,000.

“Incorporating real estate into the deal can create additional value.”

The longer loan term with reduced payments significantly impacts the buyer’s cash flow, making it an attractive proposition for them. By paying less each year, they may be willing to offer a higher valuation for your business and even pay the full price for the real estate. This means that by selling both your business and real estate together, you can potentially fetch a better deal overall.

Bundling the two assets not only creates more value for the buyer but also enhances the potential valuation of your business. By offering a longer-term loan with reduced payments, buyers are more likely to be interested in acquiring both the business and the real estate. If you have any questions, don’t hesitate to reach out to us by phone or email.