Accounting Dictionary

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Sale and Leaseback

Definition: A sale and leaseback is an arrangement where an entity sells one of its assets to a lender and then immediately leases it back for a guaranteed minimum time period. By doing so, the entity obtains cash from the sale of the asset that it may be able to use more profitably elsewhere, while the lender obtains a guaranteed lease.

A sale and leaseback is typically used for a building, but can also be arranged for other large assets, such as production machinery.