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AFO · Management buyout

Buying out the founder, modelled before the conversation.

Management buyouts (buying out a founder, admitting a management partner, acquiring the business you've been running) are leverage transactions first and equity transactions second. The leverage stack, the vendor note, and the equity injection each carry distinct economics that compound over the five-to-seven years it usually takes to retire the debt.

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What makes this use case distinct

  • Senior + mezz + vendor + equity modelled as a single leverage stack.
  • Covenant headroom matters more than headline rate in MBOs.
  • Cap-table outcomes shown under base, upside, downside scenarios.

How this is usually structured

MBO / buyout, in practice.

The senior layer is normally the cheapest dollar in an MBO, 60 to 75% of the leverage at Prime + 2 to 5%, but it carries the tightest covenants. The covenant headroom in years one and two matters more than the headline rate; a missed covenant in year two unwinds the deal economics regardless of how cheap the original facility was.

Mezzanine debt typically sits between 75% and 100% of total leverage at 12 to 18% all-in. The warrant, when there is one, needs to be modelled against management's expected exit valuation, not the entry valuation. The CPA models the cap-table outcomes under realistic, base-case, and downside scenarios so the management team knows what they actually own at year five.

Vendor financing fills the equity-injection gap. The founder takes paper for a portion of the sale price, usually subordinated to the senior and mezz, sometimes with a personal guarantee from the management team, occasionally with an earn-out tied to the post-close projection. The trade-off between vendor-note size and equity injection is the single largest determinant of the management team's eventual return.

3 programs in the catalog · 1 live

Programs that fit mbo / buyout.

Each card links to the program profile. Coming-soon programs are surfaced honestly, the screener routes there with a consultation CTA instead of a self-serve apply link until the integration is wired through.

Other use cases

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Each use case has its own structuring conversation. Working capital and equipment look nothing like an MBO; an export ramp doesn’t look like a refinance.

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    Export

    Export financing addresses two distinct gaps at once: the up-front cost of entering a new market (research, travel, trade shows, translation, IP protection) and the working-capital cycle of fulfilling export orders (longer DSO, currency exposure, foreign-buyer credit risk). Different instruments cover each gap; the right structure usually layers two or three.

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Match the instrument to the use, not the other way round.

Twenty-minute call. Bring the use of proceeds and a rough sense of where the business stands today; we’ll walk through which instrument or stack fits, what providers will want to see, and how long the engagement takes.

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