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PARTNER BUYOUTS

Finance a partner buyout while keeping your business’s future in focus.

Significant purchase obligations can coincide with existing lending restrictions and ongoing operating expenses. Explore financing structured around those competing needs.

DEALS WE SUPPORT

Fund an Ownership Transition Without Losing Sight of Operating Capital

When one business partner or shareholder exits, the remaining owners may need substantial capital to purchase that interest. The agreed price is often larger than the cash a company can set aside, and the transaction must balance purchase obligations against the business’s ability to keep funding its operations.

The right financing structure can help turn a planned ownership change into a workable plan. Great Elm Commercial Finance provides asset-based and secured financing that can help fund an agreed buyout, structured around the company’s assets, its existing lenders and its ongoing capital needs.

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COMMON FINANCING CHALLENGES

Financing Challenges in Partner Buyouts

Buying out a partner is a significant event for a closely held business. These are the circumstances that most often create a need for outside financing.

The agreed buyout consideration may exceed the cash available in the business. Paying it from operating cash can leave too little for payroll, inventory and customer commitments, which is why many companies look to outside financing.

Ownership and control arrangements change when an owner exits. The borrower, the remaining owners and the collateral position may all be different at closing, and lenders need to understand who stands behind the business afterward.

Existing lenders may restrict additional debt, distributions to owners or changes to the security granted. A buyout often requires the current lender’s consent or a change to the facility.

The business must retain adequate working capital after closing. A buyout is best evaluated together with the company’s continuing operating requirements.

FINANCING CONSIDERATIONS

What a Buyout Financing Structure Must Address

The ownership transaction and the financing used to complete it are two different things. The purchase terms are agreed between the owners; the financing has to be built around what the company can support once the transaction closes.

Great Elm reviews these items alongside the owners and their advisors. Whether a given structure is available depends on the transaction, the collateral and the approval of all parties.

What we review

  • Transaction price: the agreed purchase amount, the parties and any signed or anticipated agreements.
  • Sources of funding: how the purchase will be paid, including company cash, new financing and any seller arrangements.
  • Post-buyout ownership: the borrower, the remaining owners and the effect on existing equity.
  • Existing senior financing: whether junior capital alongside the current facility or a combined facility is the better fit.
  • Available collateral: the assets that can support the financing and how existing liens affect them.
  • Future debt obligations: repayment, operating needs and debt restrictions after closing.

RELEVANT FINANCING SOLUTIONS

Financing Options for Partner Buyouts

Great Elm structures financing around each transaction. Availability and terms depend on the borrower, the collateral and the proposed buyout.

Junior Capital Loans

Supplemental financing that can sit alongside an eligible asset-based lending structure, where the existing lender permits, to help fund an ownership transaction.

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Unitranche Loans

A potential combined financing arrangement that brings senior and junior capital together in a single facility for an eligible buyout.

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Recent Deals

Financing deals that move businesses forward.

Explore our recent financing transactions and discover how we’re helping businesses access the capital they need to grow and succeed.

See More Deals

FREQUENTLY ASKED QUESTIONS

Partner Buyout Financing FAQs

Answers to common questions about financing the purchase of an owner’s or partner’s interest, and how the financing options differ.

It can for eligible transactions. Whether debt financing is available depends on the proposed transaction, the company’s collateral and the approval of the parties involved.

Often, yes. Current loan agreements commonly restrict additional debt, distributions to owners and changes to ownership or liens, so consent requirements and lien priorities are best reviewed early.

Buyout financing adds debt obligations that the business must carry after closing. A structure is best evaluated against the company’s ongoing working capital needs, repayment capacity and any restrictions the new financing imposes.

Junior Capital is supplemental financing that sits behind, and alongside, an eligible senior asset-based facility. Unitranche is a single combined facility that brings senior and junior capital together. Which fits depends on the existing financing and the transaction.

Discuss Financing for a Partner Buyout

If you are planning a partner or shareholder buyout, tell us about the proposed ownership change, your anticipated funding needs and your existing financing arrangements. Great Elm can review the transaction, available assets and potential financing structures alongside your advisors.

Contact Our Financing Team

Tell us about your business and what you’re looking to finance. A member of our team will follow up to discuss your needs and potential next steps.