Shareholder & partner buyouts

When a buyout is agreed but the money isn’t there yet

A shareholder or partner is leaving — a retirement, a falling-out, a planned succession, or a death or disability that triggers your buy-sell agreement. A price has been set, or is close to it, and the remaining owners have the right to buy the departing interest. The problem is rarely the agreement; it’s the cash. A bank won’t fund a change of control quickly, the company’s money is working in the business, and the equity that could cover the buyout is sitting in property — not in the account. Meanwhile the buy-sell timetable, or the departing owner, wants the matter closed.

How the funding works

A second mortgage behind your existing mortgage — or a caveat where the deadline is tight and speed matters more than term — releases equity from property the company, the remaining owner, or the trust already owns. There’s no refinance of your first facility and no disturbing your current rate. The funds pay out the departing shareholder or partner at the agreed price, the share transfer completes, and the registers update. It’s assessed on the security and a clear exit, not full financials, so it moves at the speed of the deal rather than the bank. The exit is usually a refinance to longer-term finance once the new ownership is bedded down, or the business trading through; the short-term funding bridges the gap to that point.

When this works — and when to settle the split first

This suits a clean, agreed buyout: a real, documented valuation, a price both sides accept, and a genuine exit. It does not suit a contested or unvalued separation. If the price is disputed, or no proper valuation has been done, borrowing fast against the property doesn’t resolve the disagreement — it funds one side of an argument and enlarges the loss if the deal unwinds. That reader is better served first by their accountant or adviser, an independent valuation, and the dispute mechanism set out in the shareholders’ agreement. Sometimes the right answer is to settle the number before funding it. One more accountant-grade point: a departing owner’s personal guarantees don’t fall away automatically on a share transfer — a release usually has to be sought, often as part of the refinance.

What we’ll need

The property and the existing mortgage details, the agreed buyout price (and the valuation or buy-sell clause behind it), and the exit. No full financials to start. We confirm the indicative terms and the position behind your first mortgage, and move from there. All figures are indicative and subject to assessment; full terms sit on our rates and fees page.