Choosing an advisor
Should real estate be included in or separated from the business sale price?
Why owners usually price the building apart from the company, and how a lease or a property sale fits into the deal.
By Michael D. Rubin, CEO & Founder · September 2026 · 954 words
In most sales, the real estate should be priced separately from the business, even if the same buyer ends up acquiring both. The company is valued on its earnings; the building is valued as property. Mixing them into one number usually hides what each is worth and can cost you money on one side or the other.
Separating them does not mean you must keep the building. It means you decide, deliberately, whether to sell it, lease it to the buyer or sell it later, and you price each piece on its own terms.
The company and the building are valued in different ways
A buyer pays for a company based on its adjusted EBITDA: earnings before interest, taxes, depreciation and amortization, after removing one-time and owner-specific costs. For a profitable business with $3 million to $100 million in revenue, the price is most often three to seven times adjusted EBITDA. Real estate is priced on what comparable properties sell for and the rent they can produce, and it is normally valued by a commercial real estate appraiser, not a business valuation professional.
Fold the building into the business price and a buyer ends up applying a business multiple to a combined figure that makes sense for neither asset. Worse, if your company pays you no rent, or below-market rent, its earnings look better than they really are once a buyer has to pay a real landlord. Keeping the two apart forces the numbers to be honest.
Expect a rent adjustment in the recast
When an owner holds the building in a separate entity and the company pays rent, a buyer asks one question: is that rent at market? If you have been charging the company too little, the buyer will reduce adjusted EBITDA to reflect a fair rent, which lowers the price at whatever multiple applies. If you have been charging too much, the excess can be added back, which raises it.
Either way the fix is the same: set the rent at market, document it in a written lease, and let the financial recast (the restated earnings a buyer sees) reflect it. Our business valuation work builds that adjustment in before buyers ever see the numbers, so it is not discovered and argued about during due diligence.
Three ways to handle the property
| Option | How it works | When it tends to fit |
|---|---|---|
| Sell the building with the company | Two prices in one transaction, one for the company and one for the property, each supported by its own valuation | You want a clean exit, and the buyer or its lender wants to own the site |
| Keep it and lease it to the buyer | You stay the landlord under a new multi-year lease at market rent, usually with renewal options | You want ongoing income and the building suits the business for years to come |
| Sell the property separately, now or later | The property goes to an investor who leases it back to the company, or you hold it and sell after the business closes | The buyer does not want to tie up capital in real estate |
What buyers and their lenders care about
Many buyers, particularly private equity groups, prefer not to own real estate; they want their capital working in the operating company. Others, including some individual buyers using SBA financing, may want the property too, because real estate can often be financed over a longer term. Either way, the buyer's lender will read the lease closely: its length compared with the loan, renewal options, whether it can be assigned, and who pays for the roof, parking lot and HVAC.
The lease becomes a sticking point when it is left to the end. Agree its main terms (rent, length, renewals, maintenance and any purchase option) before or alongside the letter of intent, or LOI, the short document in which a buyer states its price and key terms. Where the property is part of the purchase, our business financing relationships can help structure SBA, conventional or seller-financed terms.
Tax, entity and legal questions to settle early
How you hold the property changes what you keep. If the building sits inside the operating company, a sale of the company's stock may carry the building with it, and pulling it out first can have tax consequences. If it sits in a separate LLC, you have more room to choose. Your CPA should model the after-tax result of selling versus leasing, and your transaction attorney should draft the lease or the real estate purchase agreement. We do not give tax or legal advice; our job is to make sure the business price and the property plan fit together and that buyers understand both.
Industrial sites raise one more issue: environmental history. Buyers and lenders of manufacturing and distribution properties often order an environmental site assessment, and surprises there can delay a closing. Our long read on what causes a sale to fall apart in due diligence covers how to get ahead of findings like this.
How MDR & Associates handles the property question
In the free discovery meeting we ask who owns the building, what rent the company pays and what you want the property to do for you after the sale. We then recast earnings with a market rent, present the business to buyers on its own merits, and state clearly in the confidential marketing package whether the property is for sale, for lease or both. When offers arrive, we compare them on total value to you, including the lease or property price, not just the headline number.
If you own the building your company operates from and want a first look at what the business itself may be worth, start with a free valuation snapshot.
Where this fitsTexas M&A advisors and business brokers →