What Everyone Gets Wrong About Sale-Leasebacks
Welcome back to the Mid Market Insider!
Today, I’m diving into sale-leasebacks, what they are, and why they’re not as bad as most people say.
“We don’t want the land.”
It’s something you hear a lot in buying and selling negotiations.
And if you’ve never been through a sale process, it might sound odd.
After all, the land is part of the package, right?
Not always.
Most buyers aren’t interested in owning the land a business sits on.
They’re focused on acquiring the operational asset, not tying up capital in real estate.
That’s where Sale Leaseback (SLB) transactions come in.
Here’s how it works:
The buyer offers a price for the business and the real estate.
The buyer finds a real estate investor to purchase the land and building(s).
The purchases are consummated simultaneously.
The business continues to operate in the same location.
It just signs a long-term lease for the property.
It’s simple, pretty clear, and surprisingly common.
SLBs get a bad rap sometimes, like it’s a sign something shady is happening.
But that’s not the case.
In reality, it’s just a reflection of a different investment philosophy:
Buyers want to grow the company.
They don’t want to be in the real estate business.
And that’s not a knock on the land or the seller.
It’s just a practical way to structure a deal.
If you’re a founder and someone tells you they don’t want the land, it’s not personal.
It just means the buyer is trying to stay focused on what they do best, running businesses, not managing land.
SLBs aren’t a red flag. They’re just a tool.
And like most tools in a deal, it comes down to how you use it.
📺 What to Watch This Week
We just posted a new video on our YouTube channel!
5 Businesses You Should NEVER Start
Click the link below and check it out:
That’s all for today’s newsletter! Thanks for reading!
📅 Next Week:
In next week’s edition, we’ll be diving into why you should focus on being a “Toyota” in business… instead of a “Ferrari.” Stay tuned!
Keep building,
Nick
P.S.
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