A company's location can be central to the deal. Find out who owns the property, what transfers, and whether the business can keep operating there before treating the price as complete.

A company can look like one acquisition in a teaser. The building may belong to a separate company or to the seller personally. The buyer may be purchasing the business alone, buying the property too, or taking over a lease. The documents should say which.

Start by finding out who owns the operating business, who owns the property, and who receives the rent. Do not assume they are the same people or companies. The Small Business Administration's guide to buying an existing business tells buyers to ask about contracts and leases alongside cash flow and inventory. A lease belongs in the diligence file early, not in the pile of documents left for the final week.

First, find out what is being sold

Ask the seller to spell out whether the asking price includes the building and land. If not, ask who owns them and what arrangement will let the company use the site after closing. Sometimes the owner of the business also owns the property. Sometimes a separate landlord does. The paperwork should make the answer clear.

This matters before you compare price or earnings. A company that has paid below-market rent to a related owner may face a different occupancy cost after the sale. A company with an outside lease may already have rent and maintenance obligations that continue. Build your view of the business around the costs and rights the buyer can actually keep, rather than assuming today's arrangement carries over unchanged.

If the business will keep renting

Read the signed lease and its amendments. Check how long it runs, what options extend it, when rent can change, and who pays for repairs, taxes, insurance, and shared costs. Look for terms about assignment, a change in ownership, or landlord consent. Ask a transaction lawyer to explain what the actual lease allows. A verbal promise that the business can stay is not a substitute for a usable agreement.

Then ask whether the location is important to the company's work. A shop may need its current power supply, loading access, customer parking, or room for installed equipment. A move could affect customers, employees, permits, or the time it takes to serve an order. Ask what would need to change if a move became necessary, and what that would cost.

If the seller or a related company is the landlord, discuss the post-close rent and lease term before finalizing the business case. Put the expected rent into the model and compare it with the rent recorded in the company's books. If the new terms are not settled, show that as an open item instead of treating it as a known cost.

If the property is for sale too

Treat the real estate as its own part of the decision. Ask for the property price separately, review its condition, and understand any large repairs that may be due. Owning gives the company more control over its location, but it takes more capital and leaves the buyer responsible for the property. Leasing preserves capital, but leaves the business subject to a landlord and the lease terms.

When land and a building are bought for one lump sum, IRS Publication 551 says the property's tax basis is allocated between the land and the building. Bring a tax adviser into that work rather than guessing at the split. Keep the property terms visible in the transaction, even when the main focus is the operating company.

Questions to settle before the price is final

  • Is the land or building included in the offer, or is the buyer acquiring only the operating business?
  • Who owns the property, and who will sign the lease after closing?
  • What do the current lease and amendments say about rent, term, renewal, repairs, assignment, and consent?
  • Can the business keep operating at this site on written terms that fit the buyer's plan?
  • If the property is included, what condition, financing, tax, and repair questions need separate review?

The building may be a small part of the seller's story and a large part of the buyer's operating plan. Find out what transfers, what it costs, and who controls the site before you decide what the business is worth.