Chapter 10 - What About Commercial Property?
Many businesses have commercial property (s) that is owned by the business. This can be the office the business is run from, a factory or warehouse used by the business or even an investment property not related to business operations. One way commercial property can be looked at is profit that the Seller did not take out as dividends but invested in commercial property inside the business. This would not be that different than if they had invested in stocks/bonds on the balance sheet instead of taking dividends. An argument can then be made that this 'frozen' profit should therefore be returned to the owner at closing in a similar way to excess cash. Alternatively, if the property is appropriate and functional for the business, it can be viewed as any other cash producing asset such as a machine which drives EBITDA and is, therefore, part of the balance sheet delivered to the Buyer at closing. There are generally two ways of dealing with this commercial property:
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