How do you feel about real estate included in deals?

by a searcher from Harvard University - Harvard Business School

5 years ago

I'm curious to hear about your experiences involving real estate packaged with businesses for sale.  How did it change your view or valuation of the business? How did it change the feasibility of the deal or your financing approach?

9 likes
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11 comments

intermediary from University of Arizona

thanks!

3 months ago | like reply | 0 likes

investor from University of Notre Dame

You could also have it both ways and talk to "sales leaseback" company. Basically you could buy the real estate from seller as part of the deal and then sell it to an outside firm right after close and lease it back from them at a market rate - if owner is willing to sell the real estate at $X and you can sell it post close for $Y you can also arbitrage some dollars. Additionally if you are borrowing money to finance the deal you can often get extremely favorable terms (15/20 year amortization) on the real estate piece. As other have said I would look to value it stand alone vs business cash flows but make sure you adjust for 'rent' expense as the pre close business would not have any.

5 years ago | like reply | 2 likes

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