Selling a business can be complicated enough with valuations, the timing of the sale, and transition planning. When you add selling the real property the business owns, it can become even more complex.

A smooth transaction that minimizes your risk is the goal any time you’re buying or selling a business. To achieve this, finding a trusted escrow partner that all parties agree to is critical.

Combination Business Asset Sales & Real Property Transactions have a lot of moving parts (sometimes literally) that need diligent oversight from an escrow agent, here are some tips in managing that process.

Combination sales encompass two primary components:

Business Asset Sales: This involves the transfer of tangible and intangible assets such as equipment, trademarks, and trade names.

Real Property Transactions: This includes the sale of the physical property where the business operates, such as the building and land.

Each of these components has its own considerations and requirements when being purchased, both legally and fiduciarily. Understanding the process as it relates to both of these components is key for both buyers and sellers.

This includes:

Initial Consultation

Understanding the specific needs of the clients and outlining the escrow agreement.

Business Sales: Businesses may have unique aspects to their operations or products that need to be discussed as it relates to the contractual requirements.

Real Property Sales: Special considerations for things like zoning or long-term building liabilities need to be reviewed and defined.

Documentation and Compliance

Handling all necessary paperwork and ensuring compliance with legal and regulatory requirements is at the heart of any combination business and real property sale.

Business Sales: All required financial, operational and regulatory documentation must be submitted, reviewed and approved by the parties involved.

Real Property Sales: All contractually required inspections or certifications must be upheld as part of the sale.

Funds Management

Setting up transparent escrow accounts to manage the transfer of funds securely.

Business Sales: Complex payouts like equity, earnouts, or additional contractual work make managing the funds a complex part of the process.

Real Property Sales: Similar to other property or asset sales, collection and disbursement of funds for the property is straightforward though typically contingent on the business sale’s success.

Coordination with Stakeholders

Working closely with brokers, attorneys, and financial institutions to facilitate a seamless transaction.

Business Sales: From the initial consultation to the last dollar being transferred, there are numerous parties that have to be kept up to date on a business sale’s progress and compliance with the purchase contract.

Real Property Sales: Special considerations for things like zoning or long-term building liabilities need to be reviewed and defined.

Closing the Deal

Ensuring that all conditions are met before releasing funds and finalizing the sale.

Business Sales: Finalizing a business sale can take place in stages over a long period of time for tax or logistics purposes, so extra attention is needed until the deal is closed.

Real Property Sales: Transferring funds, deed/title ownership, and any liabilities to the new owner of the property.

Successfully managing numerous combination sales, Arizona Escrow recently demonstrated their capability and reliability handling the sale of multiple car wash locations, along with its real property for $7.9 million. This transaction involved a seller carry-back and was collateralized with commercial real property and business assets, showcasing their expertise in managing high-value, complex deals.

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