Most buyers do not want the real estate associated with the business. Thus, you keep it. At that time, you have two alternatives. The first is to hold the lease and receive the rentals. The second is to sell the real estate.

The first option is easy; a lease has to be created. If the real estate was owned outside the corporation, a lease is all that is required. However, if the buyer buys the stock and the real estate was held in the corporation, then you have to transfer the real estate out. This is done in a tax-free transaction called a “Drop Down LLC”—a term for the creation of a holding company with exactly the same ownership that was in the corporation. Now, we have real estate law combined with tax law and corporate law. It all gets a bit too technical, but we can do it.

The second option is selling the real estate. If you own it outside the company, no problem—just sell. If the real estate is held in the corporation, the same “Drop Down LLC” has to be created so that you can sell it.

Imagine all the work selling the company and the real estate. Recently, we had a corporation with two pieces of property held in the corporation. We sold these within a few months of closing the corporation’s sale.

• You do the tax-free transfer of the property right at the sale.
• You offer the property (once you assess the proper price) during the corporation buyer's due diligence period. That consists of interviewing commercial brokers, selecting one, having them help prepare the lease, and having them prepare the real estate offering and contact prospective buyers.
• Get everything ready to close and go at it after the sale—you are almost there.

A lot of work—especially while you still have to run the company, but we know how and have done it.