Seller wants to lease RE

by a searcher from University of South Carolina - Darla Moore School of Business

10 months ago

I'm looking at a 25 year old auto-body workshop and the seller owns the real estate and wants to sell business only and rent out the real estate into the future.  In principle, this seems to make sense. With the rent adjustment factored in, it's selling for a fair price relative to earnings.

Maybe I'm being paranoid, but is there a risk that post-sale the seller somehow crashes the business (by hiring away key workers to a friend or bad-mouthing the company, etc.) and then re-establishes the company under a new name in the same location?

Obviously, there would be a non-compete, but it seems to me that a seller who takes the role of landlord post-sale has huge leverage over the company into the future.

Am I reasonable to be concerned about this?

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lender from California State University, Sacramento - College of Business Administration

Live Oak has an auto body vertical. DM if interested in speaking with our vertical team on the financing. And echo the comments about seller keeping rel as that’s a common first phase with a FROR. --@----.com

10 months ago | like reply | 0 likes

lender from Eastern Illinois University

I concur, it is common. I would not worry about it. I would try to be sure to get an option to purchase or a right of first refusal if they look to sell in the future, that way you can control the location going forward.

10 months ago | like reply | 1 like

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