How important are specialized asset leasing businesses to the success of innovative arrangements like a sale and leaseback?

Answer 1

The sale-and-leaseback lease is a form of asset financing, which allows a business to sell an asset they already own to a leasing company and then lease the asset back. A specialized asset leasing business is purchasing the asset at the lesser price of the fair market value, or the current book value. This form of lease allows for an immediate increase in the selling companies cash flow and working capital while providing immediate access to the asset. By agreeing to purchase the asset back, through regular lease payments, the company maintains their credit options and maximizes financial leverage. Additionally, they are not faced with a lump sum payment for the asset. The leasing company is performing an asset financing service, and benefits in the interest rates charged for the lease. This option works well for companies that do not want to continue to own an asset but require the use of the asset throughout its useful life. khfrench - University of Phoenix - MGT/325 October 24, 2005 reference: The Motey Fool Fool.co.uk (2005). Asset/Lease Financing retrieved from http://fool.xbridge.com/ Sale and leaseback arrangements have been around for 2000 years so not much innovative about that. As for "Asset leasing businesses" for the most part this is a simple form document used by the businesses seller/leasebacker. These types of transactions do not require ellaborate outside assistance as the end result is often a transfer of remaining assets when the buyer has a "business interuption". In other words, the document simply states the list of assets, the financial terms, and the consequences for failure to pay. No need for outside services to perform routine business activities.