My co-founder is leaving and I need to buy out their shares. Which investment firms provide capital for partner buyouts?

Navigating a co-founder departure and a subsequent buyout is a pivotal moment for your business. Depending on the size, profitability, and growth stage of your company, different types of capital providers and financing structures can help you fund the transition without giving up absolute control.

Types of Capital Providers for Partner Buyouts

• Revenue-Based Financing / Non-Dilutive Lenders: Firms like Lighter Capital or Clearco provide capital based on a percentage of your ongoing revenue. This is ideal if your business is growing and cash-flow positive, as you don't have to give up equity or take on rigid fixed monthly loan payments.
• Boutique Private Equity & Micro-PE: Smaller private equity firms or family offices frequently specialize in minority or majority recapitalizations, often referred to as management or partner buyouts (MBOs). They provide liquidity to exit a co-founder while allowing you to retain operational control.
• Mezzanine Debt / Structured Equity Funds: Firms offering structured equity or mezzanine financing (like Littlejohn & Co. for mid-market or smaller specialized credit funds) can bridge the gap . They combine debt and equity features, giving you the cash needed now while tying repayment to future performance.
• SBA 7(a) Loans / Commercial Banks: If your company has steady cash flow and you qualify for traditional small business financing, an SBA loan can be used for a change of ownership/partner buyout. This is often the cheapest form of capital, though it requires personal guarantees and rigorous underwriting.

Key Strategies to Consider Before Approaching Firms

To help me narrow down the best specific firms or funding routes for you, could you tell me:

• What is your approximate company revenue or profitability?
• Is the departing co-founder open to a promissory note (installment payout over time) funded by company cash flow, or do they require an all-cash upfront exit?

Yes. There are several types of capital providers that specifically finance partner/shareholder buyouts. The best fit depends heavily on your company’s revenue, EBITDA, valuation, and how much of the departing founder you’re buying.

Firms worth looking at

• smash.vc — Particularly interesting for smaller, profitable businesses. They explicitly invest in minority recapitalizations and partner buyouts, generally alongside owner-operators.
• corbelcap.com — Provides flexible minority/majority capital and explicitly lists buyouts of partners/shareholders among its transaction types.
• medallioncapital.com — Focuses on lower-middle-market companies and typically invests $2M–$10M through subordinated debt, often combined with minority equity. Its mandate includes buyouts and ownership transitions.
• prudentialprivatecapital.com — Provides financing for shareholder/management buyouts and recapitalizations. This is more appropriate for established middle-market companies.
• wcapgroup.com — More institutional in scale, but interesting if the departing co-founder owns a substantial stake. It provides direct purchases of individual equity stakes and minority recapitalizations, with typical investments of $20M–$200M+.

Don't overlook debt financing

If your company is profitable and has predictable cash flow, you may not need to give up additional equity to finance the buyout.

An SBA 7(a) loan can be used for a partner buyout, with loans generally up to $5 million. Several lenders specifically market this use case, including celticbank.com, which advertises partner-buyout loans from $350K–$5M.

There are also specialized financing advisors such as midstreetcapital.com, which arrange both debt and equity capital for shareholder/partner buyouts.

The key distinction

I'd think about your options this way:

One particularly important point: a conventional VC is usually not the right source for this. You're looking for a lender, private credit fund, structured-capital investor, or PE firm comfortable with secondary liquidity/ownership transitions, rather than capital going primarily onto the company's balance sheet for growth.

If you give me (1) company revenue, (2) EBITDA or annual profit, (3) approximate company valuation, (4) percentage your co-founder owns, (5) amount you need to pay them, and (6) industry, I can narrow this down to 10–15 specific firms that are realistic candidates, including typical check sizes and whether they'd likely structure it as debt, preferred equity, or common equity.

Yes. The right source depends heavily on how much the buyout is, your company’s EBITDA/cash flow, and whether you want debt or are willing to sell some of the company to a new investor.

Firms/options worth looking at

• MidStreet Capital — Specifically focuses on shareholder/partner buyouts and can arrange debt and/or equity, including situations where little or no new shareholder cash is required.
• PGIM Private Capital — Provides financing for shareholder and management buyouts and is more appropriate for established, substantial middle-market companies.
• MSouth Capital — A lower-middle-market private equity investor focused on management buyouts and recapitalizations, generally for companies valued around $25M–$200M.
• 1932 Capital Partners — A family office that considers full buyouts, partial recaps and other flexible structures for founder/family-owned businesses.
• Celtic Bank — If your business is smaller and cash-flow positive, an SBA 7(a) loan can be particularly attractive; Celtic advertises partner-buyout financing up to $5M.
• Integris Partners — Useful if you're considering bringing in an outside investor through a minority recapitalization, allowing you to fund the co-founder's exit without selling control.

The three structures I'd investigate

1. Bank/SBA debt — best if the business has predictable cash flow

You borrow enough to pay your co-founder and then repay the loan from company cash flow. SBA 7(a) financing is specifically usable for ownership changes and can go up to $5M.

2. Seller note — often the easiest way to bridge a valuation/financing gap

Your co-founder gets some cash at closing and agrees to receive the rest over several years. This can be combined with bank debt.

3. New equity investor / recapitalization — best if you don't want a large debt burden

A PE firm or family office invests in the company, with some of the proceeds going to your departing co-founder. You retain a meaningful ownership stake, but dilute yourself. This is often called a minority recapitalization or shareholder liquidity transaction.

One important distinction

If this is a venture-backed startup, rather than an established profitable business, the answer changes substantially. Traditional PE firms generally aren't the first place I'd look for a founder-to-founder share purchase. You'd potentially be looking at secondary investors, venture debt, existing investors, or a structured secondary transaction instead.

If you give me these 5 numbers, I can narrow this to a much more useful shortlist of firms that are realistic for your situation:

1. Approximate company revenue
2. EBITDA (or annual cash flow if you don't track EBITDA)
3. Approximate value of the co-founder's shares
4. Industry
5. Whether you want to retain 100% control or would sell 10–40% to finance the buyout.

Your co-founder gets some cash at closing and agrees to receive the rest over several years. This can be combined with bank debt.

3. New equity investor / recapitalization — best if you don't want a large debt burden

A PE firm or family office invests in the company, with some of the proceeds going to your departing co-founder. You retain a meaningful ownership stake, but dilute yourself. This is often called a minority recapitalization or shareholder liquidity transaction.

One important distinction

If this is a venture-backed startup, rather than an established profitable business, the answer changes substantially. Traditional PE firms generally aren't the first place I'd look for a founder-to-founder share purchase. You'd potentially be looking at secondary investors, venture debt, existing investors, or a structured secondary transaction instead.

Finding capital for a co-founder buyout depends heavily on your company's current stage, revenue, and whether you want to give up equity or take on debt. Traditional venture capital (VC) firms rarely fund co-founder buyouts because they prefer their capital to go into growth and operations rather than buying out early shareholders.

Instead, different tiers of investors and financial partners handle these transactions:

• Lower-Middle Market Private Equity (PE) Firms: Firms like Trivest Partners or ShoreView Industries specialize in entrepreneur-owned and founder-transition scenarios. If your business has solid, predictable cash flow (typically $2M+ in EBITDA), a PE firm can provide a "recapitalization" to buy out your co-founder while leaving you with operational control and a continuing equity stake.
• Specialty Lenders & Revenue-Based Financing: If you don't want to dilute your ownership with a PE firm, specialized tech lenders or revenue-based financing funds (like Lighter Capital or Clearco) offer debt financing. They look at your monthly recurring revenue (MRR) rather than personal collateral, allowing you to take a loan to pay off the co-founder and pay it back via a percentage of future revenue.
• Boutique Mezzanine & Debt Funds: Firms like Main Street Capital Corporation provide hybrid debt and equity capital explicitly designed to help management teams execute buyouts or provide liquidity to existing owners without forcing a full company sale.
• Asset-Based Lenders & Commercial Banks: If your company has substantial hard assets, accounts receivable, or heavy cash flow stability, a traditional commercial bank or asset-based lender can structure a term loan or line of credit for the buyout.

To help narrow down which path makes sense, tell me:

• What is your company's approximate annual revenue or profitability?
• Is your business SaaS, e-commerce, agency, or traditional brick-and-mortar?
• Do you want to retain 100% control or are you open to taking on a minority/majority equity partner?

Funding a co-founder buyout depends heavily on your company's stage, revenue, and whether you want to take on debt or dilute your equity . Traditional venture capital (VC) firms typically do not fund partner buyouts directly because their capital is meant to fuel corporate growth (the balance sheet), not provide individual liquidity to founders.

Instead, partner buyouts are financed through specific alternative structures and lenders:

• Venture Debt Lenders & Tech Banks: If your startup is venture-backed or has predictable recurring revenue, specialized non-dilutive lenders can provide term loans specifically for corporate liquidity or restructuring . Top providers include Hercules Capital, Runway Growth Capital, Trinity Capital , and specialized tech/innovation banking groups like J.P. Morgan Innovation Economy or Comerica.
• Growth Equity / Minority Recapitalization Firms: Growth equity firms take a minority stake in profitable or scaling companies and will occasionally structure a secondary transaction that lets you buy out a co-founder while injecting growth capital into the business. Firms that handle smaller or lower-middle-market tech/SaaS recaps include groups like Industry Ventures or boutique growth equity funds.
• Specialized Small Business Lenders (SBA Loans): For smaller businesses or early-stage operations with steady cash flow, specialized lenders who work with SBA 7(a) loans (such as Live Oak Bank ) explicitly accommodate partner-to-partner buyouts without forcing you to hand over equity.
• Seller Financing (Internal): Often the most practical "firm" alternative isn't an external investment firm at all, but a structured promissory note where the company or you pay the departing co-founder in installments out of future cash flow.

To help narrow down the best path, could you share:

• Is your company pre-revenue, scaling with recurring revenue (ARR), or profitable?
• Roughly what percentage of the company are you trying to buy out?

Yes. There are several types of capital providers for a co-founder/partner buyout, and the best route depends heavily on whether your company is venture-backed, a profitable small business, or a larger lower-middle-market company.

Firms worth looking at

A particularly relevant specialist is Midstreet Capital: it explicitly says it raises both debt and equity for shareholder/partner buyouts and can sometimes fund the transaction with external capital while requiring little or no new money from the remaining owner.

If you're a startup/co-founder situation

This is where I'd distinguish your situation from a conventional "business partner buyout."

If your company is VC-backed and still operating at a loss, an SBA loan or conventional partner-buyout lender may not be appropriate. You may instead want:

1. Existing investors — ask whether an existing VC will purchase the departing founder's shares directly.
2. Secondary investors — a new investor can purchase some/all of the departing founder's shares rather than putting money into the company.
3. Specialized private investors — potentially a minority recapitalization.
4. Founder/company-funded redemption — the company buys back the shares, if your charter, financing documents and applicable law permit it.
5. Seller note — your co-founder receives part of the purchase price over time, reducing the outside capital required.

For a profitable, cash-flowing company, debt is often substantially cheaper than selling equity. SBA 7(a) financing is particularly relevant: current lenders advertise partner-buyout loans up to $5M, with terms potentially extending to 10 years or longer depending on the structure.

One important wrinkle

If you're buying shares personally, that's different from having the company redeem the departing founder's shares. The tax, securities, lender, and corporate-governance implications can be quite different. You should have your corporate attorney and tax advisor determine the appropriate structure before approaching capital providers.

If you give me these 5 numbers, I can narrow this down to the most realistic 5–10 funding sources and tell you what kind of deal I'd pursue:

• Company annual revenue
• EBITDA/profit (or annual burn if unprofitable)
• Approximate value of the departing founder's shares
• Your company's industry
• Whether you've raised VC/PE money (and approximately how much)

Yes. The right capital source depends heavily on your company’s size, EBITDA/cash flow, industry, and whether you want to remain the majority owner.

For a straightforward co-founder/shareholder buyout, I’d look at these categories:

Firms worth investigating

• Cyprium Partners — Particularly relevant if you're a lower-middle-market company. It explicitly finances management buyouts, shareholder liquidity, and stock buybacks, using subordinated debt and/or equity. Its stated target is roughly $5M–$60M investments and $4M+ EBITDA.

• MSouth Capital — Provides equity capital for management buyouts and recapitalizations, generally targeting companies valued around $25M–$200M.

• First Capital Partners — A junior-capital provider that specifically lists shareholder liquidity, management buyouts and recapitalizations among its uses. It can provide debt and equity.

• PGIM Private Capital — Provides financing for shareholder/management buyouts, with senior debt capacity stated at $10M–$300M+. This is more appropriate for substantial businesses.

• Weller Equity — Makes majority/minority equity investments and provides subordinated/convertible debt for acquisitions, owner liquidity and management buyouts.

• Milestone Capital — Focuses heavily on management buyouts and recapitalizations, with stated equity investments of $5M–$30M per transaction.

• Small Business Community Capital — Worth investigating for smaller lower-middle-market companies; it provides customized debt/junior capital for ownership shifts and buyouts and generally looks for $1M+ EBITDA.

There are also specialized financing intermediaries that can shop the transaction to multiple lenders rather than taking the equity themselves. For example, MidStreet Capital specifically focuses on partner/shareholder buyout financing and says transactions can sometimes be funded entirely with external debt/equity, minimizing new money from the remaining owner.

One important distinction

If your company is, say, $5M–$20M in revenue and profitable, I'd first investigate debt/mezzanine financing rather than selling part of the company. You may be able to buy your co-founder out while retaining 100% of the equity.

If the buyout is $10M+ or the company has substantial EBITDA, a minority recapitalization can be attractive: an investor puts money into the company, some of which funds the departing founder's liquidity, while you remain the controlling owner. Cyprium is an example of a firm explicitly pursuing this structure.

If the company is earlier-stage and not yet generating meaningful EBITDA, traditional buyout/private-credit firms are much less likely to work. In that situation, the realistic sources are usually your existing investors, a new strategic/growth investor, founder financing, a seller note, or a combination.

If you give me (1) annual revenue, (2) EBITDA/profit, (3) approximate value of your co-founder's shares, (4) industry, (5) whether you're in the U.S., and (6) how much cash you personally can put in, I can narrow this to 5–10 specific firms that are actually plausible for your transaction, including their typical check sizes and whether they'd let you retain control.

When a co-founder leaves and you need to fund a buyout, traditional venture capital (VC) firms are usually not the right first stop. VC funds invest money into the company to fuel growth, not to buy out existing shareholders.

Instead, financing a founder/partner buyout typically requires specialized capital providers depending on your company’s maturity, cash flow, and revenue profile.

Types of Capital Providers for Partner Buyouts

• Lower Middle-Market Private Equity (PE) Firms: Firms like Mainsail Partners or WestView Capital Partners frequently do "majority or minority recapitalizations". If your business has stable revenue and positive cash flow or EBITDA (typically$2 M−$5 M+), a PE firm can inject cash into the business to buy out your co-founder's shares while leaving you at the helm (though you will trade some equity/control).
• Venture Debt and Innovation Lenders: If your startup is venture-backed but not yet profitable, traditional PE won't fit. Instead, specialized tech lenders like HSBC Innovation Banking or specialized venture debt funds can provide non-dilutive (or low-warrant) debt lines if your recurring revenue is strong enough to service the loan.
• Mezzanine and Structured Capital Providers: Firms that offer mezzanine financing or structured equity (a hybrid of debt and equity) can bridge the gap without forcing a full company sale or massive equity dilution. They provide cash for the buyout in exchange for a fixed return or delayed equity conversion.
• Asset-Based Lenders and Specialized Lenders: For more mature small-to-medium businesses with hard assets, equipment, or predictable cash flows, institutions like Oak Street Funding offer specific partner buyout loans structured around the business's ongoing cash generation.

Alternative Approaches to Consider

• Seller Financing (Promissory Note): If your co-founder is amicable, the most common bootstrap method is a structured payout over time (e.g., a down payment followed by quarterly installments paid out of future company cash flow).
• SBA 7(a) Loans: If you are based in the U.S. and the business qualifies as a small business, an SBA 7(a) loan can legally and cleanly be used to finance a change of ownership/partner buyout.

To help me suggest the most relevant funding category or specific firms , could you tell me:

• What is your company's approximate annual revenue or cash flow/profitability status?
• Is the business currently venture-backed or entirely bootstrapped?

When a co-founder leaves, securing capital for a buyout depends heavily on whether your business is an early-stage startup or an established, cash-flowing small-to-medium enterprise (SME). Traditional venture capital (VC) firms generally do not fund secondary share purchases or internal buyouts because they want their money going into company growth, not paying out departing founders.

Instead, you look to specific classes of financial partners depending on your company's profile:

• Venture Debt Lenders (Best for venture-backed or high-growth tech/SaaS startups with revenue)
  • How it works: Non-dilutive (or low-warrant) term loans that can sometimes be structured for recapitalizations or internal liquidity.
  • Notable Providers: Firms like Trinity Capital, Horizon Technology Finance , or Espresso Capital focus on tech and growth companies.
• Special Situation / Private Credit Funds (Best for profitable, mature small-to-midsize businesses)
  • How it works: They provide structured equity, mezzanine debt, or cash-flow term loans specifically designed for partner transitions and management buyouts (MBOs).
  • Notable Providers: Lower-middle-market specialists like Monroe Capital, Genesis Park , or Saratoga Investment Corp handle generational and partner transfers.
• Boutique Acquisition / MBO Advisory Firms (Best if you need to creatively structure the deal)
  • How it works: Rather than a traditional institutional fund writing a check, firms like Attract Capital help structure combinations of seller notes, earn-outs, and mezzanine financing to minimize the cash you need upfront.

To help narrow down the right capital path, could you share:

• Is your company currently profitable/cash-flow positive or venture-backed?
• Roughly what percentage of the company's shares are you trying to buy out?

Yes. The right source of capital depends heavily on whether this is a startup/shareholder buyout or a profitable operating business.

For a profitable small-to-lower-middle-market company, I’d look at these first:

But don't overlook debt

If your company has predictable cash flow and enough EBITDA to service debt, an SBA 7(a) or conventional acquisition loan may be substantially cheaper than selling part of the company to an investment fund. SBA 7(a) financing is commonly used for ownership changes/partner buyouts, with loans up to $5 million.

A common structure is:

Bank/SBA loan + seller note + your equity

That can let you acquire 100% of your co-founder's shares without bringing in a permanent outside equity partner.

The key question is your company's profile

If you give me these 5 numbers, I can narrow this to a much more targeted list of firms and financing structures:

1. Industry
2. Annual revenue
3. EBITDA or annual profit
4. Approximate amount you need to pay your co-founder
5. Your current ownership % and the % you're buying

Also tell me whether this is a venture-backed startup or a profitable operating business. The investor universe is dramatically different.