When price alone won't close the deal, structure will
Deal structuring is designing the terms that make a deal work, not just setting the price. The right structure can bridge a gap on price, financing, timing or taxes, and protect every side while it does.
- KW Commercial
- Fiduciary First
- Brokers & owners
- Nationwide
What is deal structuring?
Deal structuring is the work of designing a transaction's terms (who pays what, when, how it's financed, how it's taxed and who carries which risk) so that a deal both sides want can actually close. Price is one lever. Financing, timing, tax treatment, ownership and risk allocation are the others.
It's how deals get across the line that would otherwise die over a financing gap, a tax bill or a disagreement between partners. Example: the buyer is short on financing, so a seller carryback covers the gap and the seller earns interest on the difference.
Strategies we use
- Seller financing (seller carryback): the seller accepts part of the price as a note secured by the property, bridging what a lender will fund and what the deal needs
- 1031 exchanges: defer capital gains tax by exchanging into like-kind real estate, including reverse and improvement exchanges, on strict identification and closing deadlines
- 721 UPREIT exchanges: contribute property to a REIT's operating partnership in exchange for operating partnership units, generally deferring tax while moving into a diversified, more liquid holding
- Cost segregation studies: an engineering-based study that reclassifies parts of a building into shorter depreciation lives to accelerate deductions and improve after-tax cash flow
- Tax strategies beyond 1031: installment sales, Delaware Statutory Trust (DST) replacement properties, Qualified Opportunity Zone investments and depreciation planning around a sale or purchase
- Joint venture and partnership splits: capital partner and operating partner terms (capital calls, preferred returns, waterfalls, control and exit) built to last
- Earnouts: part of the price paid later if the property or business hits agreed performance targets, closing a gap between what a buyer will pay today and what a seller believes it's worth
- Sale-leasebacks: an owner-occupier sells the building and leases it back, freeing up equity while operations stay put
- Master leases with purchase options, loan assumptions and partner buyouts: for deals that need time, preserved debt or a clean exit
Choose a structure in the explorer below to see when it fits and what to watch.
Who we structure deals for
- Sellers who want a higher net, a tax deferral, ongoing income or a staged exit
- Buyers who need a financing bridge, a lower basis or better after-tax returns
- Developers who need land, JV equity, phased takedowns or a capital partner
- Investors, family offices, business owners and partnerships planning a 1031, 721, recapitalization or partner buyout
Kevin's background in business ownership, investing and asset management is why the team is called in when a deal is complicated by financing constraints, ownership structures, operational issues or competing stakeholders.
Where structure solves real problems
- A price gap: seller financing or an earnout bridges what a buyer can fund today and what a seller needs
- A financing gap: an assumable loan, seller carry or preferred equity fills what the bank won't
- A tax problem: a 1031 or 721 exchange, an installment sale or a cost segregation study changes the after-tax math
- An owner-occupier who needs capital: a sale-leaseback converts the building to cash while the business stays put
- Partners who disagree: a recapitalization or buyout structure lets one partner exit cleanly
Structures that closed
How we work with your CPA and attorney
We design and negotiate the business terms; your real estate attorney documents them and your CPA or tax attorney confirms the tax treatment. We bring those advisors in early so the structure holds up.
Important: tax strategies such as 1031 and 721 exchanges, cost segregation, installment sales and opportunity zone investments have strict rules and depend on your situation. Always confirm any tax strategy with your CPA or tax attorney before you act. Nothing on this page is legal or tax advice.
Our process, step by step
- DiagnoseFind the real gap: price, financing, timing or tax.
- ModelRun two or three structures with real numbers.
- AlignBring attorney, CPA and lender in early.
- NegotiateTerms every side can live with.
- DocumentClean paper and a closing calendar.
Kevin has worked in sales and management since 2009 and in real estate since 2017. Under his leadership The Kohler Team has generated more than $100 million in cumulative commercial real estate transaction volume. He serves on the Keller Williams Agent Leadership Council, is a Florida real estate licensee and Licensed Community Association Manager, and has spoken at national conferences on commercial real estate, negotiation and team building.
Deal Structuring: common questions
What is deal structuring in commercial real estate?
Deal structuring is designing a transaction's terms (financing, timing, tax treatment, ownership and risk) so a deal both sides want can close. It includes tools such as seller financing, 1031 and 721 exchanges, cost segregation, joint ventures, earnouts and sale-leasebacks.
What is a 721 UPREIT exchange?
In a 721 exchange, a property owner contributes real estate to a REIT's operating partnership in exchange for operating partnership (OP) units, generally deferring capital gains tax under Section 721 of the Internal Revenue Code. It's often used after a 1031 into a DST. OP units can later be converted to REIT shares, which is usually a taxable event. Confirm it with your CPA or tax attorney.
What is a cost segregation study?
A cost segregation study is an engineering-based analysis that reclassifies parts of a building, such as fixtures, finishes and site improvements, into shorter depreciation lives. That accelerates depreciation deductions and can improve after-tax cash flow, though depreciation may be recaptured at sale. Your CPA decides whether and how to use it.
What tax strategies are there beyond a 1031 exchange?
Common options include 721 UPREIT exchanges, installment sales, Delaware Statutory Trust (DST) replacement properties, Qualified Opportunity Zone investments and cost segregation. Each has strict rules and trade-offs, so we model the deal and your CPA or tax attorney confirms the tax treatment.
What are the 1031 exchange deadlines?
After you close the sale of the relinquished property, you have 45 calendar days to identify replacement property in writing and 180 calendar days (or your tax return due date, if earlier) to close on it. Use our deadline calculator, then confirm the dates with your qualified intermediary.
How does seller financing work on commercial property?
With seller financing, the seller accepts part of the price as a promissory note secured by the property, and the buyer pays it over time. It can widen the buyer pool and support price, but the seller takes on credit risk, so down payment, rate, term and default remedies need careful negotiation.
What is a sale-leaseback in commercial real estate?
In a sale-leaseback, a business sells the property it occupies to an investor and, at the same closing, signs a long-term lease to stay. The owner frees up the building's equity as cash while operations continue; the investor gets a leased asset with a known tenant.
What is an earnout in a real estate or business sale?
An earnout pays part of the purchase price later, if the property or business hits agreed targets such as occupancy, NOI or revenue. It bridges a valuation gap, but the targets, measurement and reporting must be defined precisely.
When does a joint venture make sense?
A joint venture fits when one party brings capital and another brings the deal, expertise or the land. The operating agreement (capital calls, preferred return, waterfall, decision rights and exit) matters more than the headline split.
Do you provide legal or tax advice?
No. We design and negotiate the business terms and coordinate the transaction. Always confirm tax strategies with your CPA or tax attorney, and have your attorney prepare the legal documents.
Often paired with Deal Structuring
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