THE SHORT ANSWER
State how the operating premises will be provided after the business sale: an accepted existing lease, a separately defined property transaction, or a new lease from a seller who retains the building. Compare usable rights, recurring costs, funding and seller obligations. Keep business value, property value and closing proceeds on explicit bases. Ownership is not automatically better than leasing.
State the actual premises proposal
Identify the property owner, operating entity, area actually used and any landlord, lender, co-owner or other relevant rights. Describe whether the offered price includes real estate, only the business or a business plus a proposed new lease. Mark unsigned terms as proposals.
SBA sale guidance discusses valuation and identifying sale assets and liabilities.
(SBA: closing or selling a business)Have the accountant, property professionals and counsel define what is included and how it is valued. A building recorded in related-company accounts is not automatically an included operating-business asset. If the seller retains the property, rental receipts and landlord duties are a separate continuing business decision.
Compare the three premises paths on actual terms
Use this worksheet with responsible parties rather than treating a lease or deed label as proof that operations can continue.
| Premises path | Evidence and economics to resolve |
|---|---|
| Existing third-party lease | Actual assignment/change-of-control conditions, accepted buyer terms and full occupancy costs |
| Property included or separately sold | Ownership/title review, stated price/asset scope, condition, permitted use and actual funding |
| Seller retains building and leases it | Proposed supported rent, term, security, repairs, insurance and accepted landlord/tenant duties |
Review actual lease/deed, renewals, charges, repairs, insurance, security, premises use and guarantees with advisers. Identify who must approve the proposed occupant/operator and what evidence establishes acceptance. Neither an omitted assignment clause nor an existing lease payment automatically decides the legal result.
Reconcile rent, equipment and property without double counting
Normalize earnings on a clearly supported occupancy basis using the earnings bridge. Explain actual related-party rent and any proposed post-sale change with the accountant. Compare permanent occupancy expenses consistently; do not remove rent from earnings while assuming the buyer occupies the building at no cost.
Define equipment and fixtures already included in the business or property transaction. Do not automatically add an appraised building price to a business value whose asset basis already contains it, or value the same earnings and rent twice. Separate one-time required investment, financing, recurring property duties and transaction costs.
SBA acquisition guidance calls for premises, operating costs and professional investigation.
(SBA: evaluating an existing business purchase)Have qualified parties review condition, permitted use, environmental facts and actual funding. This page provides no appraisal, assessment clearance, owner-occupancy loan eligibility or guaranteed property financing.
Compare proceeds and continuing seller duties
Record the business and property consideration separately, actual debt settlements, fees, adjustments, escrows, deferred payments and a qualified tax estimate. A building sale price is not automatically unrestricted seller cash. If the property is retained, identify debt, repairs, vacancies, insurance, rent collection and other landlord exposure instead of calling rental income passive or guaranteed.
Use the consent register for premises rights and the closing-balance guide for deposits, bills and allocated duties. Ask the buyer/lender and advisers to confirm the actual accepted path and funded operating needs. Choose among workable documented proposals according to the owner’s circumstances; this guide assigns no universal value premium or tax advantage to ownership or leasing.
Owner questions
Is the building always included in a business valuation?
No. State the included asset basis and any separate property price or lease proposal explicitly.
Can I retain the property and call the rent guaranteed passive income?
No. Review actual rent rights, funding, debt and continuing landlord duties and risks.
Should rent be removed from earnings because the seller owns the building?
Have the accountant reconcile a supported post-sale occupancy basis; the proposed operation still needs premises and an explicit cost treatment.
Sources and review scope
Source review completed . The sources below support the identified concepts or rules; they do not validate hypothetical amounts or a valuation of your business.
- SBA: closing or selling a business
Valuation approaches, sale agreements, assets and ownership transfer.
- SBA: evaluating an existing business purchase
Current consolidated planning page, acquisition sections: investment and operating costs, personal fit, infrastructure, investigation and professional document review. Not proof of off-market availability, superior pricing or financing approval. No franchise-specific conclusions taken from this source.
Confirm tax, legal, accounting and lending applications with the relevant professionals. Historical market observations describe the stated period and reported sample.
This is educational material. Industry figures and program rules can change; check the original sources and your advisors before applying them to a transaction. Calculator scenarios are not appraisals, lending decisions, or offers.
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