New analysis from Edison Avenue shows fewer than 10% of privately held companies sell real estate before the operating business
, /PRNewswire/ — In the sale of privately held U.S. companies that own their operating real estate, selling the commercial property before the business remains the exception rather than the norm, according to a review of lower-middle-market transaction data, brokerage surveys, and SBA-financed acquisitions.
Across industries, only an estimated 5–10% of transactions involve the real estate being sold ahead of the operating company, while the majority of owners either sell the business first and retain the property under a long-term lease, or sell both assets together in a single transaction.
The findings challenge a common assumption among business owners that monetizing real estate first is a standard or lower-risk exit strategy.
“From a buyer’s perspective, selling the real estate first often introduces unnecessary friction,” said Edward Valaitis, an M&A advisor with Edison Avenue who advises owner-led businesses. “It can reduce the buyer pool, constrain financing options, and in many cases compress the valuation of the operating company.”
How Transactions Typically Occur
Based on aggregated market observations:
- 65–75% of deals involve the business being sold first, with the seller retaining the real estate and leasing it to the buyer.
- 20–30% involve the business and real estate sold together.
- Only 5–10% involve the real estate sold prior to the business.
The sequencing matters. Buyers underwriting operating companies typically prioritize cash flow stability and operational continuity. When a seller becomes a tenant immediately before a sale, lease terms, rent levels, and landlord risk become new variables that buyers price conservatively.
Industry Differences
The frequency of selling real estate first rises modestly in sectors where the land itself carries redevelopment or alternative-use value, such as certain restaurant, hospitality, or auto-related properties. In manufacturing, distribution, and service businesses, selling the building first is uncommon.
Why the Data Matters Now
With interest rates elevated and financing scrutiny tighter than in prior years, buyers and lenders are placing increased emphasis on clean deal structures. Advisors report that transactions with fewer structural complexities are closing more predictably and at stronger multiples.
“In today’s environment, structure is not a technical detail — it’s a value driver,” Valaitis said. “Owners who understand how buyers and lenders actually underwrite deals are better positioned to preserve leverage and certainty.”
Bottom Line
While selling commercial real estate first can make sense in specific circumstances, market data indicates it is rare and often value-dilutive unless intentionally engineered. For most owner-operators, selling the business first — and deciding separately when and how to monetize the property — remains the dominant and more flexible path.
About Edison Avenue
Edison Avenue is a full-service mergers and acquisitions advisory firm specializing in the successful sale and acquisition of privately held businesses. Led by an experienced team of Certified M&A Advisors, the firm provides comprehensive valuation, preparation, and transaction support designed to maximize value while minimizing delays and risk. Through a best-practice, detail-driven methodology, Edison Avenue delivers strategic solutions that help entrepreneurs efficiently realize the wealth built within their companies.
Media Contact:
Edward Valaitis
M&A Advisor
Edison Avenue
800-975-2114
[email protected]
www.EdisonAvenue.com
SOURCE Edison Avenue
