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  • Why You Should Have A Commercial Real Estate Broker Sell Your Company

    Mar 1, 2022

    IBA was honored to be included once again in the Puget Business Journal’s list of largest Commercial Real Estate Brokerages serving the Seattle Metropolitan area (https://www.bizjournals.com/seattle/subscriber-only/2022/02/18/commercial-real-estate-brokerages.html) in February.  The inclusion is always special because, although true based on the number of licensed real estate brokers working out of our corporate office in Bellevue, all of our peers in the ranking work in the traditional commercial real estate activities of property sales and leasing.  IBA NEVER exclusively represents commercial real estate for sale in a building only transaction.  The only time we represent real estate for sale is when it is part of a comprehensive representation package offered to a client also selling a privately held company or family business.

    In the world of mergers & acquisitions that IBA has professionally represented sell side clients in since 1975, not all firms have brokers on staff who have real estate broker licenses.

    The following are six reasons why it is prudent to engage a business brokerage firm with a team of experienced, knowledgeable, highly skilled commercial real estate brokers as intermediaries to represent their clients.

    1. Comprehensive Representation – The sale of a business is a sophisticated, nuanced transaction. The sale of commercial real estate is similarly complicated. It is prudent to have one professional conducting marketing and negotiations related to the sale of the combined business and real estate entity.  In the last couple of months, the IBA team has sold a winery, school, electrical contractor, and auto repair business that included both company and property.
    2. Tax Mitigation – IBA is a market leading M&A firm in terms of its knowledge and experience structuring transactions to mitigate taxes. We have yet to find a client seeking to pay more taxes on a sale than less.  Tax mitigation options increase with the sale of real estate.  It is wise to have a broker on your team who possesses the ability to cover topics such as 1031 Exchanges, IRS(C) 453(A) Installment Sales, and Charitable Remainder Trusts.
    3. Resources – One of the items you are purchasing when you sign a listing agreement to sell commercial property is the Rolodex of the real estate broker and their supervising firm. The longer the broker has been in the business and the more transactions they have completed, the larger their network of support professionals.  IBA as the oldest business brokerage/commercial real estate firm in the Pacific Northwest (Completing our first transaction in 1975) and most active, over 4200 successfully completed transactions, has one of the largest resource Rolodexes in the United States. In a commercial real estate context this can be very valuable in navigating obstacles on the road to closing ranging from environmental issues to financing difficulties to elements needing land use or tax attorneys with very specific knowledge.  IBA is collaborative corporate culture that is well known in the real estate community.  We are happy to help residential & commercial brokers with projects that exceed their knowledge & experience and not afraid to bring in specialized knowledge, experience, and ability, when we do not have it in house.  As a thirty-year member of the Commercial Brokers Association, we know many of the members of the organization from sharing continuing education classes, doing deals, and serving on panels & work groups together to improve documents, practices, and procedures.  We are also a proud sponsor of the Washington Chapter of CCIM (https://www.ccimconnect.com/ccimwashington/home), the highest credential a commercial real estate professional can obtain in the United States.
    4. Lease Assignment – In metropolitan areas, it is very common for businesses to be located in leased locations. A licensed real estate broker is a requirement by law to facilitate a lease assignment by any party other than the existing tenant, a new potential tenant, or attorney.  If problems arise in or after the assignment, a non-licensed party can be held liable for the unlicensed practice of real estate and any potential damages that resulted from their acts.  Think the issues associated with a lease assignment are straight forward, think again.  Issues to be addressed in a lease assignment can range from adding term to mitigate buyer risk or to satisfy financing requirements; addressing trailing liability associated with the lease for the assigning party (It is common for landlords to want to keep the seller of a business on a lease as a guarantor); to getting a landlord to subordinate their collateral interests to an acquisition finance lender who wants primary lien position on the furniture, fixtures, equipment, and inventory of a company.
    5. New Lease Negotiations – Business sales are commonly contingent on the buyer securing a satisfactory facility lease. The lease can be in an existing space or a new space, if relocation is a requirement.   In most transactions, IBA represents the buyer in the these negotiations as part of our comprehensive representation package at no cost to the buyer.  The reason this professional service is provided for free is because IBA is paid on the sale of the business and for us to achieve the mutual objectives of IBA and our client, we need to obtain a lease that satisfies the buyer and frequently their lender.
    6. Unique Lease Terms – When you have been around as long as IBA, you have seen almost everything in terms of real estate issues. It is often not the price & term issues that impact the assignability or acceptability of a lease.  Options, rights of first offer, demolition clauses, maintenance of HVAC systems, parking, Eminent Domain, and other issues if not addressed with knowledge, experience, and skill can kill a deal or negatively impact a business after sale.  Philosophically, IBA looks at business buyers as future sell side clients.  The last thing we want is for a future customer to be adversely impacted by an issue that could have been addressed or avoided.

    Successful business people recognize areas where they lack knowledge, experience, and skill and delegate responsibility to the best party they can locate for the project.  This commonly occurs in the Pacific Northwest with residential and commercial real estate brokers referring business owners to IBA for sell side representation.   We welcome the referrals and compensate the collaborative partner at closing for their contribution to the project’s completion.  Information on our real estate referral program can be found on this page of our website:  https://ibainc.com/about-iba/real-estate-broker-referral-program/

    IBA, the Pacific Northwest’s premier business brokerage firm since 1975, is available as an information resource to the media, business brokerage, and mergers & acquisitions community on subjects relevant to the purchase & sale of privately held companies and family owned businesses.  IBA is recognized as one of the best business brokerage firms in the nation based on its long track record of successfully negotiating “win-win” business sale transactions in environments of full disclosure employing “best practices”.

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