When the seller becomes a partner: the story of a successful transfer

Traditionally, a company buyout is financed through several levers: a cash contribution from the buyer, bank financing, and sometimes an earn-out contingent on future performance.

These mechanisms are well known and proven, but they often overlook an option with strong potential: partial reinvestment by the seller in the new acquisition structure.

Imagine a thriving company that has been run by its founder for 20 years. The company attracts a buyer who is impressed by its profitability and positioning.

Rather than selling 100% of his shares and leaving the company entirely, the founder chooses to reinvest part of the proceeds from the sale in a holding company, known as BuyCo, created specifically for the transaction.

This holding company provides both the bank financing and the equity contributions necessary to acquire the target company. This structure protects the operating company, the target, from any debt related to the transaction. The loans will be repaid later, via dividends paid by the target to BuyCo.

This arrangement offers a double advantage.

For the buyer, it reduces the initial financing requirement while allowing them to benefit from the valuable expertise of the long-standing manager.

For the seller, it offers the opportunity to remain involved in the development of their company without having to deal with the day-to-day management constraints. In practice, the selling manager often reinvests part of the proceeds from the sale (e.g., 20%) as equity capital in BuyCo.

On the closing date, they thus become a co-shareholder in the project, and a shareholders’ agreement sets out the rules of the game.

This formula is attracting more and more buyers, because keeping the historical manager on board, even partially, means preserving invaluable intangible assets: market knowledge, customer trust, and team loyalty.

It is also a way to leverage their entrepreneurial spirit. Many executives, having reached a turning point in their lives, sell because of administrative or managerial fatigue, not because they lack ideas.

By involving them in a new project, but in a more strategic role with fewer operational constraints, we enable them to reactivate their creativity: exploring new markets, launching new offerings, and structuring growth.

Key performance indicators (KPIs) are often included in the shareholder agreement, such as achieving a certain level of EBITDA or signing new contracts, and may entitle the seller to an increase in capital.

Of course, any cohabitation must be regulated. In the event of strategic disagreement, a desire for early exit, or a divergence of vision, liquidity and exit clauses (good/bad leaver, buy/sell, drag/tag along, etc.) are provided for from the outset.

The goal is to preserve the stability of the partnership while ensuring smooth governance.

Essentially, this model is based on a simple idea: transfer should not be a break, but a continuity.

For the buyer, it guarantees intelligent support and a smooth transition. For the seller, it offers the opportunity to transform a personal story into a collective adventure, while participating in the creation of future value.

And in a market where customer loyalty, corporate culture, and managerial stability are assets as valuable as balance sheet figures, this hybrid approach, part transfer, part partnership, is increasingly establishing itself as a lever for sustainable success.

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