[FeelTheWork]

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.

[Olderguy]

You can do business purchase financing through the SBA 7A at 90%. Can also do a seller carryback to get to 95%. This is not a MCA type of deal.

Have to look at it and figure out a structure....maybe some kind of seller full or partial financing can be involved.

Reach out.

[Chambo]

I did something like this years ago. The previous owner had to cosign on the MCA, the purchase agreement had to be signed

Because the business had been opened for many years, was able to facilitate

[FundingCaptain]

The way Steve depicted is the best way to do it.

However, using an mca product, what I have seen in the past is have the current owner stay on, and with each round of funding, they give a percentage of ownership to the new owner and/or have some other sort of document (such as a buy-out agreement) depicting how much is left. The problem is that the mca wont get this done in one shot. Typically the sale price is much more than a few rounds of funding so it takes a long time for the current owner to walk away fully paid.

[closer129]

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.

I have done this in the past. The old owner needs to qualify for the mca and add the buyer to the business and will be on the contract with the old owner. The old owner needs to stay on the business until we are paid back fully then he can come off the business. If that could work here feel free to reach out to me.

Scott Platto
scott@tmrnow.com
tmrnow.com
212-220-9872

[Yankeeman07]

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.

This should NOT be a MCA Deal - you want to saddle the new owner with a super high cost of capital?

What is the financials of the employee wanting to purchase the business.
You don't mention what amount of funding they are seeking, how much skin in the game does the employee have?

Many questions, but, you should be going down the path of SBA or Term Loan, NOT MCA $$$