Many SMEs own the factory, offices or premises where they operate. For the entrepreneur, the property often represents financial strength and the result of investments made over many years.

When the company is put up for sale, however, the operating business and the real estate are not necessarily viewed in the same way.

A buyer may be interested in the business, its customers, expertise and production capabilities, but may not want to acquire the property as well. They may already have suitable premises, prefer a less capital-intensive structure or consider the overall investment too high.

Owning the property does not therefore automatically increase the value of the transaction. In some cases, it strengthens the opportunity. In others, it narrows the pool of potential buyers and makes it more difficult to balance price, business continuity and the seller’s objectives.

Selling the company with or without the property

The first decision concerns the scope of the transaction.

If the property is owned by the same company that operates the business, it is normally transferred together with the rest of the company in a share deal. By acquiring the company’s shares, the buyer also acquires its real estate, debt and other assets and liabilities.

This may be appropriate when the property is closely connected to the company’s operations. Examples include a factory built around equipment that would be difficult to relocate or premises with specific features required for production, logistics or regulatory approvals.

In other cases, the property can be separated from the operating business before the transaction or excluded through a different deal structure. The buyer acquires the business and continues to use the premises under a lease agreement.

There is no single solution that works for every SME. The right choice depends on the role of the property, the buyer’s requirements, the owner’s objectives and the way the transaction is structured.

When including the property can support the sale

Property ownership can be an advantage when it provides stability and helps ensure business continuity.

A buyer may view it positively when:

• the location is strategically important for logistics or access to customers;
• relocating production would be complex or expensive;
• the premises are suitable for the company’s future requirements;
• the property does not require significant maintenance or upgrades;
• its value is consistent with the overall asking price;
• ownership removes the risk of depending on a landlord.

In these cases, the property is not simply an investment asset. It becomes part of the infrastructure required to preserve customers, processes and production capacity.

Even so, the value of the property should be assessed separately from the value of the operating business. A profitable company and an owned factory generate value in different ways and should be analysed accordingly.

When the property can discourage buyers

The property can complicate a sale when it significantly increases the required investment without offering an equally important benefit to the buyer.

A strategic buyer may intend to transfer the operations to an existing facility. A financial investor may prefer to commit capital to developing the business. Other buyers may simply not want to invest substantial funds in a property they do not consider strategic.

For example, if the operating business is worth €8 million and the property is worth another €4 million, the total investment may become too large for many potential buyers.

The issue is not necessarily the value attributed to the property. The problem is that including it can turn an industrial acquisition into a much larger investment.

Properties that are oversized, inefficient or in need of major improvements may also become a concern. A buyer could see them as a future cost rather than an asset that adds value.

In these situations, requiring the business and the property to be acquired together can reduce the number of interested parties and weaken competition around the company.

Separating real estate from the operating business

Separating the property from the business can make the transaction more accessible. The buyer concentrates the investment on the company’s operations, while the seller retains an asset capable of generating rental income over time.

However, this decision should not be made once negotiations are already at an advanced stage. Moving a property out of the operating company may require corporate, tax, financial and regulatory assessments. Mortgages, bank guarantees, restrictions or the interests of other shareholders may also need to be considered.

Before taking action, the owner should assess:

• the market value of the property;
• its practical importance to the business;
• any debt secured against it;
• the corporate and tax implications of the separation;
• the level of rent the business can sustainably afford after the sale;
• the time required to complete the separation;
• whether potential buyers are willing to operate from leased premises.

The separation must have a clear economic rationale. Its purpose is not simply to allow the current owner to retain an asset. It should create a clearer and more sustainable transaction structure for the buyer as well.

This issue is different from the decision to introduce a holding structure before a sale. In this case, the central question is not the corporate or tax structure, but which assets should be included in the transaction.

The lease agreement after closing

When the seller retains the property, the lease agreement becomes a substantial part of the negotiation.

The buyer needs certainty that the company can continue using the premises for a suitable period and on sustainable terms. An unclear lease or one that can be terminated too easily can increase perceived risk and reduce interest in the business.

The main points to address include:

• lease duration and renewal terms;
• rent in line with market conditions;
• rent review and indexation mechanisms;
• allocation of operating costs and maintenance;
• responsibility for any required upgrades;
• the right to invest in or alter the premises;
• conditions applying if the property is subsequently sold;
• any future purchase option granted to the company.

The rent requires particular attention. If the company previously used an owned property without paying rent, introducing a lease creates a new cost that reduces future profitability.

If the company already paid rent that was not in line with market conditions, its financial performance will need to be adjusted to reflect the cost the buyer will actually bear.

The lease is therefore not a secondary agreement. It directly affects margins, valuation and business continuity.

The impact on the company’s price

Separating the property does not simply mean deducting its value from the overall price.

If the property is excluded, the company will need to pay rent. This cost reduces the operating profitability on which the buyer bases the valuation. The value of the business may therefore change because of its new cost structure.

If the property is included, its value should be separated from the value of the operating business, while any associated debt must also be considered. A high overall price may largely reflect the company’s real estate rather than a greater ability to generate profit and cash.

Before approaching the market, it is therefore useful to prepare at least two scenarios:

1. sale of the business together with the property;
2. sale of the business while retaining the property and leasing it to the company.

Comparing these scenarios shows how the price, future profitability, buyer funding requirements and overall outcome for the seller may change.

The effect on the pool of potential buyers

The scope of the transaction directly influences which buyers may be interested.

Requiring the acquisition of a high-value property may exclude buyers that are a strong industrial fit but are not prepared to make the additional real estate investment. Separating it can make the company accessible to a wider range of parties and increase the possibility of receiving different offers.

At the same time, some buyers may not want to depend on the seller for access to a factory that is essential to the business. For them, the ability to acquire the property may be a condition for proceeding with the transaction.

A flexible structure can provide several alternatives. The buyer may be given the option to acquire the property, lease it or purchase it at a later stage. This approach can broaden the pool of potential buyers while maintaining clear terms for every option.

Defining the transaction scope before approaching buyers

The role of the property should be addressed before the sale process begins, not after an offer has been received.

The owner should establish the property’s value, verify its planning and cadastral position, identify any restrictions and determine how important it really is to business continuity. It is also necessary to understand how the company’s financial performance would change if market rent were introduced.

Presenting a clear transaction scope from the outset reduces uncertainty and allows buyers to submit comparable offers. Changing the structure during negotiations can slow down the process, create valuation differences and weaken the seller’s position.

Frequently asked questions about real estate in a company sale

Does owning the property always increase the company’s value?

No. The property has its own value, but it can make the acquisition more expensive and narrow the pool of potential buyers. Its contribution depends on its role in the business and the level of market interest.

Can an entrepreneur sell the company and retain the factory?

Yes. If the transaction is structured correctly, the seller can retain ownership of the property and lease it to the company after closing. Any separation should be assessed and prepared well in advance.

How is the rent determined after the sale?

The rent should be consistent with market conditions and sustainable for the business. Excessive rent reduces the company’s profitability and can negatively affect its valuation.

Is it always advisable to separate the property before approaching buyers?

No. The characteristics of the business and the requirements of potential buyers should be analysed first. A separation carried out without a clear strategy may introduce costs and complexity without improving the transaction.

Conclusion

In the sale of an SME, real estate can provide operational continuity or become an obstacle for potential buyers.

The decision is not simply whether to sell the factory together with the company. The real question is which transaction scope makes the business more attractive, financially sustainable and consistent with the seller’s objectives.

Assessing the sale with and without the property makes it possible to compare different scenarios, establish credible lease terms and approach the most suitable pool of buyers.

A valuable property remains an important asset. To support a successful company sale, however, it must be included in the right transaction structure.