Insights

2026-01-05

Funding Exit Strategies & Ownership Transitions

Introduction

For many companies, planning for ownership exit, whether through sale, succession, or transition, is critical. SBA 7(a) loans can facilitate partner buyouts, management buy-ins, or ownership restructuring while preserving value.

1. Common Transition Paths

Management buyouts (MBOs)
Family succession or intra-family transfers
External sale financed with SBA debt

2. Using SBA 7(a) in Transitions

Finance the buyout of an owner or partner
Support a leveraged recap or partial buyout
Smooth continuity without drastic disruption

3. Structuring the Transition

Valuation and “fair market” pricing
Equity injection and deferred payments
Escrow or contingent earnouts

4. Documentation & Legal Considerations

Buy-sell or succession agreements
Updated governance and ownership documents
Tax planning, estate implications

5. Risks & Mitigation

Ensuring continuity of management
Preserving key customer relationships
Bridging capital to cover post-transition gaps

Key Takeaway

Ownership transitions are high stakes, but SBA 7(a) offers a flexible financing tool for firms to execute them while maintaining continuity and value.