ROBS funded business acquisitions with real estate component

May 05, 2023
by a searcher from Yale University - School of Management in Rochester, NY, USA
Oftentimes, small business owners who also happen to own the real estate on which their business operates will set up a separate legal entity to own the real estate (the "RealPropertyCo") for a variety of reasons. The operating company (the "OpCo") will then lease the real estate from the RealPropertyCo.
Since the RealPropertyCo and the OpCo have common ownership, the lease is considered a related party / affiliate transaction. My understanding is that under the rules governing ROBS-funded transactions, these sorts of related party / affiliate transactions are not allowed.
QUESTION: What are some ROBS-compliant and tax-efficient structures that folks have used when purchasing businesses together with their real estate holdings?
Thanks in advance for your thoughts / input.
from University of Illinois at Urbana in Rockford, IL, USA
from Missouri Western State University in Kansas City, MO, USA