It’s bound to be good!

Written by: Nick Ursem

For many business owners, their premises are more than a pile of bricks. It is a place where the company has grown, successes have been celebrated, and where everything feels familiar. The building is a certainty and a matter of course that does not receive much attention in daily practice. But as soon as a sale comes into the picture, that property changes from certainty to issue. Is the property part of the deal, or not?

A buyer looks first and foremost at the company itself: can it continue and grow successfully? Important aspects here are customers, employees, knowledge and profitability. Real estate can play a role in this, for example, if the property is crucial for production or is located in an important location. But in many cases, a buyer actually sees it as a burden. The property ties up capital that could otherwise be used for growth or innovation. So for many a buyer, the premises are not an opportunity, but rather a burden.

This is precisely why it can be smart to separate the real estate from the business and house it in a separate real estate limited liability company. This gives the buyer a chance to focus fully on the business, while the seller keeps a new perspective: monthly rental income and the security of a tangible investment.

Yet it is not a matter of simply “passing the buck.” There are fiscal rules of play, such as deferred tax claims or the chance that the tax authorities will regard the property as an investment, resulting in transfer tax. And practical matters also play an important role: what is the state of maintenance, what energy label does the property have and will a market rent be agreed? These are all details that suddenly carry a lot of weight in a sales process.

A good sales process is therefore not only about the valuation of the business itself, but also about the position of the real estate. Entrepreneurs who map this out early on increase their negotiating room and avoid unpleasant surprises afterwards. In this way, you ensure that when you sell your business, things are really fixed.

This article appeared in the fall edition of INTO business Westfriesland.