Partner Buyouts
When one or more partners in a business aim to buy out other stakeholders,
traditional senior bank loans might not provide sufficient capital to complete
the transaction. In such situations, PCA’s alternative credit solution could
prove quite useful in filling the gap. Our tailored, non-dilutive lending product
can facilitate the restructuring of ownership, providing flexibility and control
for the remaining partners
PCA’s Lending Solution, an Effective Tool
for Independent Sponsors
For those independent sponsors who have developed a track record and who may now have multiple investments in their portfolios, PCA’s lending solution can serve as a uniquely useful tool for obtaining much-needed liquidity. PCA’s loan facilities function like a NAV loan to the sponsor, secured by the equity in their existing portfolio companies. The tailored loan facility can provide the sponsor with valuable, non-dilutive liquidity that may then be utilized in a variety of ways. Sponsors can use loan proceeds to fund their equity contributions to follow-on investments, bridge to a liquidity event, recapitalize more expensive sources of capital, or provide the firm or portfolio companies with working capital. As such, PCA’s loan facilities enable the independent sponsor to invest opportunistically as if they had a fund to draw upon, enabling them to compete more effectively for deals
How PCA’s Lending Solution Can Support Your Partner
Buyout
01.
Leverage Your Existing Ownership & Assets:
Utilize the equity accrued in your ownership of the business or other personal assets to finance the buyout. This approach allows
entrepreneurs to secure additional personal liquidity, complementing any existing bank financing. The funds can be used either to reinvest in the company as equity or directly to buy out other stakeholders
02.
Retain Ownership & Control:
By borrowing against the stock in your private business as well as
other assets, you can minimize or eliminate the need to sell a part of
your company to a third party. Business owners may not wish to have a private equity firm or other buyer take a piece of their business, which may often entail giving up board seats and operational control. PCA’s
lending solution enables the entrepreneur to buyout other shareholders while maintaining control and independence
03.
Tailored Solution:
PCA’s flexible credit facilities are customized to meet the specific requirements of your buyout. Each individual situation is different and
may require creative structuring to provide the support needed to
achieve the desired outcome
04.
Maintain Business Continuity:
A partner buyout that minimizes or avoids a major change in ownership that would result from a third-party equity investor can
ensure the continued smooth operation of the business. By borrowing against your private stock in the company and other private assets,
the enterprise can continue on without major disruption.
Partner Buyout Scenarios
Retirement or Exit of a Partner
When a partner decides to retire or exit the business, PCA's capital solution can facilitate the buyout of their shares. This ensures a seamless transition and provides the departing partner with liquidity while allowing the remaining partners to consolidate ownership
Resolving Disputes
In situations where partners may have differing visions or disputes, a buyout can be an effective solution to resolve conflicts. The remaining partners can utilize the value of their private stock to obtain financing from PCA, enabling the buyout of the dissenting partner(s) and allowing the business to move forward with a unified leadership
Reorganization and Restructuring
Businesses may undergo reorganization or restructuring, requiring a change in ownership structure. PCA’s financing can support these initiatives, providing the capital needed to buy out partners and realign the business’s strategic direction
Growth and Expansion
Partner buyouts can be part of a broader strategy to position the business for growth and expansion. By consolidating ownership, the remaining partners can implement new strategies and initiatives more effectively. Private entrepreneurs may not have excess liquidity available and can therefore borrow against their private stock to facilitate such a buyout