Business, Profits and Strategy

Louis J. Desiderio
Relationship Manager,
Chief Financial Officer
(908) 245-5999 x19
louis.desiderio@realstrat.com

Preparing a Company for Sale - The Importance of Strategic Real Estate Planning

Preparing a large or small company for sale requires intense focus on a multitude of details, including operations, technology, culture, finance, taxes, and more. One of the areas often overlooked by sellers of companies is real estate, and whether it can be a positive or negative aspect of effecting a planned sale of the business. Once the decision has been made to sell a company or divest an operating business, the focus should turn to planning the sale process and active preparation. Companies that conduct appropriate planning and seek proper guidance can increase value and maintain control of the selling process. Doing so enables the seller to better anticipate, understand, and actively manage information and events to increase value and keep the selling process on track. Such an approach could involve altering the company’s strategic plan, or divesting certain assets. Strategic real estate planning plays a critical role in this process, and is driven by, and exists only in support of, an organization’s overall strategic business objectives.

A strategic real estate plan examines all of the business issues that could effect real estate requirements. More importantly it looks at how corporate real estate is aligned with corporate financial and operational objectives. An effective strategic real estate planning process begins with an in-depth review of the organization’s financial and operational goals. The goal of this review is to consider real estate from a business strategy perspective, and focus on the compelling business issues facing an organization and determine how real estate can be positioned to provide the flexibility to most effectively support strategic business objectives. In today’s very rapid business environment, a company’s ability to respond quickly and effectively to changes in operations, organizational structure, markets and business strategy, is more important than ever. This is as important to small companies as it is to large, diversified companies. Neglecting to thoroughly analyze possible contingencies, such as those associated with typically static assets or liabilities such as real estate, can have a profound bottom-line impact and limit the company’s opportunities for increased efficiencies, maximum flexibility, and leverage, in negotiating selling alternatives.

The quality of the decision-making intelligence a company gains from strategic real estate planning could have a direct impact on the ultimate exit value for the business. Value can best be maximized by utilizing financial structures that optimize the most important value components and minimize overall business risk. It is important to translate real estate risks into business risks to present an accurate picture of the business consequences of a decision. Looking at the entire picture means deciding which risks are consistent with expected business returns, and which should be avoided because their downside potential outweighs the upside.

Maximizing value creation is one of the most challenging issues facing senior management today. Strategic real estate planning can enable companies to effectively map real estate decisions to business strategy, thus resulting in improved financial and operational performance. As companies proceed with the selling process, senior management must consider the overall real estate requirements and performance, and reassess how real estate fits into their broader business decisions.

Strategic real estate planning integrates financial and strategic objectives and creates solutions that deliver maximum flexibility and increased efficiency. Selecting the right real estate services advisor as part of the planning process is as critical to success as selecting the right legal and financial advisors. Proper planning, guidance and attention to managing the selling process will significantly increase the likelihood of executing on a transaction that meets the company’s overall financial and operational objectives.

Louis J. Desiderio is Relationship Manager, Profitability and Liquidity Advisor, and Chief Financial Officer of Real Estate Strategies Corporation. Mr. Desiderio’s primary focus is to advise the Company’s clients on identification and assessment of opportunities to realize improved profitability and liquidity, through effective utilization of their corporate real estate assets and obligations. Mr. Desiderio’s keen analytical sense and problem solving abilities enable him to identify alternate real estate transaction structures designed to enhance corporate operating and financial performance.

Real Estate Strategies Corporation, located in Kenilworth, New Jersey, and serving clients throughout the country, helps companies create and execute Business DRIVEN Real Estate Solutions...and Opportunities, faster and with less risk. Visit www.realstrat.com.

Read other business, real estate, and finance articles written by RealStrat's experts.

THIS WORK IS DESIGNED TO PROVIDE PRACTICAL AND USEFUL INFORMATION ON THE SUBJECT MATTER COVERED. HOWEVER, IT IS SOLD AND/OR PROVIDED WITH THE UNDERSTANDING THAT THE AUTHOR AND THE PUBLISHER ARE NOT ENGAGED IN RENDERING LEGAL, FINANCIAL, ACCOUNTING OR OTHER PROFESSIONAL ADVICE TO THE READER. IF LEGAL, FINANCIAL, ACCOUNTING OR OTHER PROFESSIONAL ADVICE IS REQUIRED, THE SERVICES OF A COMPETENT PROFESSIONAL SHOULD BE SOUGHT. THE AUTHOR AND THE PUBLISHER SPECIFICALLY AND EXPRESSLY DISCLAIM ANY LIABILITY THAT MAY BE INCURRED AS A RESULT OF THE USE OR APPLICATION OF THE INFORMATION THAT IS CONTAINED IN THIS WORK.