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04-23-2024, 01:24 AM #1
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- Apr 2024
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Buy-out Funding Options
I have a file for a medical office and a current employee wants to buy-out the owner of the LLC. The LLC has consistent $80k-$100k monthly deposits on its bank statements. The owner and the employee have come to an agreed upon purchase price, but I am unfamiliar with options to structure a buy-out agreement such as this, especially when the buyer is not a current member of the LLC. I know some lenders/funders avoid underwriting funding for buy-outs.
Issues I’m trying to work through on this file:
1. Can this type of transaction be funded with an MCA? If not, what other funding options may be more appropriate?
2. If an MCA possible, does the buy-out agreement need to be structured as to have the transfer of ownership and the funding coincide simultaneously?
3. Or should the current owner complete the funding application and once approved for MCA, the business can be transferred to the buyer, assuming the funding agreement allows for full assignability to the buyer? Maybe also include an indemnification clause?
Any advice on how to would be greatly appreciated.
Have a blessed day.
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