# Sale leaseback

Buying the business and renting the building the seller keeps.

Most main-street sellers hold their building in a separate entity, so what looks like one deal is two, and the rent agreed at closing moves the earnings the price was built on. A below-market rent flatters the multiple you just paid and resets the day the lease renews; an above-market one hands the seller a second raise every year. Negotiate the term, the [renewal options](https://searchspheresource.com/glossary/option-to-renew) and the escalator with the same care as the price, because a lender sizes the loan on what is left after that rent.

In numbers: A $60k rent on space worth $45k of market rent costs $15k of [SDE](https://searchspheresource.com/glossary/sde) a year, which at a 3x multiple is $45k of price paid for earnings the lease removes.

Source: https://searchspheresource.com/glossary/sale-leaseback
Not dated: A definition is editorial: what a term means, why it matters, and an example. None of it reads a source that can go stale, so there is no date to take and a stamped one would be the build time wearing a costume.

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