What Happens to Your Building When You Sell Your Company?

Many family-owned businesses face this reality at some point: you decide to sell your company. 
 
Congratulations! It’s the culmination of years, maybe decades, of hard work. But if your business occupies real estate, whether owned by a related entity or leased from a third party - there’s another big question: what happens to the building?
 
The answer depends largely on whether your company owns the property through a related entity or simply leases space from an unrelated landlord. Each path requires a different strategy.
 
Scenario One: Owned Real Estate
 
If your operating business occupies a building owned by you or a related entity, several options emerge:
 
Sell the real estate before the business sale. You can sell the building to an owner - occupant and arrange to vacate once the company transaction closes. This separates the real estate deal from the business deal, providing clarity for all parties.
 
Lease the building to the buyer of the business. Instead of selling, you might keep the property and sign a lease with the buyer of your company. This allows you (or your family entity) to continue collecting rental income long after the business changes hands.
 
Formalize a lease before the sale of the business. Another option is to establish a lease between the related entity (property owner) and the operating company before selling. This locks in occupancy terms, giving the buyer certainty and making the business sale potentially more attractive.
 
Scenario Two: Leased Real Estate
 
If your company rents from an unrelated, arm’s-length landlord, the conversation is different. In this case, the business buyer will want to know:
          •        How much time is left on the lease?
          •        Are there options to renew or expand?
          •        Is the rental rate market-competitive?
 
A strong lease can be an asset to the sale, while an expiring or above-market lease can become a liability. In many cases, negotiating an extension or adjustment with the landlord before selling the business can smooth the path for a transaction.
 
Why This Matters
 
Buyers aren’t just purchasing your business operations - they’re buying continuity. If the real estate arrangement is murky, the deal becomes more complicated. By addressing how the building fits into the transaction, you eliminate uncertainty, increase buyer confidence, and often enhance the overall value of the sale.
 
Final Thought
 
Selling a business is one of the biggest financial and emotional decisions a family will ever make. Don’t let the real estate piece become an afterthought. Whether you own or lease, work with advisors who can help you consider all potential directions so you can move on to your next chapter with peace of mind.
 
Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at abuchanan@lee-associates.com or 714.564.7104. His website is allencbuchanan.blogspot.com.