Many Michigan service companies own their building, lease a yard, or both. That makes one Michigan question unusually practical: what happens to real estate in a sale. This guide covers it, along with the state's rule for M&A advisors and its income tax.
Michigan's rule for M&A advisors
Michigan adopted a rule for M&A brokers in 2019 (Rule 4.2), according to the IBBA's 2025 state list (IBBA state list (opens a new tab)). Like the federal rule, these rules are built around deals in which the buyer takes control and runs the company, which is what a majority recap is.
Real estate is a separate question
In 2003 the Michigan Supreme Court held that the state's real estate licensing law "applies only to real estate transactions," so arranging the sale of a business that does not involve real estate generally does not call for a real estate license (G.C. Timmis & Co. v. Guardian Alarm Co. (opens a new tab)). If your building, land or a lease is part of the deal, that part is a real estate matter. We never broker real estate or lease interests; property in your deal is handled separately, by people licensed to handle it, and your attorney can tell you how to structure it.
Michigan income tax for 2026
The Michigan individual income tax rate for the 2026 tax year is 4.25 percent; the Treasury determines each year whether a reduction applies (Michigan Treasury (opens a new tab)). Federal tax applies too. How your cash at close, any earnout and the later sale of your rolled stake are taxed depends on structure. Your CPA decides.
The stake you keep
In a majority recap the buyer gains control and you keep a minority stake. That stake is paid after debt and any preferred equity when the company is sold again, as our article on the second sale shows. Part of the first price may also be paid later: see earnouts and holdbacks.
The federal rule underneath
Federal law lets an M&A advisor work without registering as a broker-dealer only in deals where the buyer ends up controlling the company (presumed at 25% or more of a voting class) and is active in managing it, and the company is under $25 million in EBITDA or $250 million in revenue (15 U.S.C. 78o(b)(13) (opens a new tab)). States add their own rules on top.
Caution
Retained ownership and future upside are possibilities, not promised second paydays. Rolled or retained equity is usually illiquid, often a minority position behind acquisition debt, and can lose some or all of its value.
Sources for this guide
Own a service company in Michigan? Tell us about it and we will explain how a recap would work for you, or say plainly if it would not. We work on control transactions: a full sale, or a majority recap in which a buyer acquires a controlling interest and takes an active role in running the business. We introduce qualified buyers, including private equity groups, family offices and strategic acquirers. We do not arrange minority investments or growth-capital raises; if one may fit, we can refer you to a registered broker-dealer.