6/18/25 – SLB Capital Advisors outlined common misconceptions which private equity investors have related to sale leasebacks for Sadis’ “The Earnout” magazine
Stephen Cheng, Partner at SLB Capital Advisors, outlined some common misconceptions which private equity investors have related to sale leasebacks.
When an M&A target owns some or all of its operational real estate, in many cases, those properties can be monetized with the capital reallocated through a sale leaseback to fund a portion of the buyout.
While conceptually this is simple, we have found that there are misconceptions about the use of sale leasebacks in buyouts and the advantages SLBs confer upon PE sponsors.
Misconception #1: We should only pursue a sale leaseback when the proceeds are a sizeable portion of the total deal size.
Misconception #2: A sale leaseback will limit our ability to sell the company down the road.
Misconception #3: A sale leaseback will hold up the completion of the buyout.
Misconception #4: We should wait until interest rates go down before doing a sale leaseback.
Misconception #5: Real estate is a sideshow to our primary mission of buying and exiting companies and earning a return for our investors.
Read the full article here, beginning on page 40