When one shareholder wants to leave and the others want to stay, the natural solution is to buy their stake. It sounds simple, but the price, the financing and the protections decide whether the deal strengthens the company or leaves it weakened.
A shareholder wants to retire, change direction, or is simply no longer aligned with the others. The rest want to carry on. The most direct way to resolve the situation is to buy their stake — by the remaining shareholders, by the company itself, or with the help of an investor. Done well, the deal strengthens the company. Done badly, it leaves it indebted, with a resentful former partner and a price nobody considers fair.
Step one: what the stake is worth
The starting point is the value of the company, calculated with the usual methods — EBITDA multiples, discounted cash flows, comparable transactions. Then comes the question that causes the most argument: is the stake worth its percentage of the company’s value, or less?
- Minority discount. A minority stake without control is usually worth less per euro than a majority one. The departing shareholder tends to reject this discount; the buyer tends to apply it.
- Marketability discount. Shares in a private company are not easy to sell. Some buyers apply a further discount.
- What the shareholders’ agreement says. If there is an agreed valuation formula for a shareholder’s exit, it prevails. If there is none, everything is negotiable.
An independent valuation, commissioned and paid for jointly, is the most effective way to narrow the gap between the parties.
Step two: who buys
The remaining shareholders
They buy personally, with their own funds or personal borrowing. They increase their percentage, but bear the financial effort directly.
The company itself
The company acquires the shares, within the legal limits on share buybacks and distributable reserves. It spares the shareholders personal effort, but consumes cash or requires company debt. It needs careful legal and tax analysis.
An investor
A financial investor or family office buys the departing shareholder’s stake. The remaining shareholders gain a new partner and do not need to fund the purchase.
Step three: how it is paid
- Immediate payment, from own funds or bank debt.
- Deferred payment to the departing shareholder, in instalments over several years. It reduces the immediate effort and is often accepted by the seller in exchange for a slightly higher price or security.
- A combination of an upfront amount and the rest deferred, sometimes with a component linked to future results.
The decisive test is the company’s cash position after the deal. A buyout that leaves the company with no room to invest or to weather a bad year solves one problem and creates another.
Contract protections
- Non-compete and non-solicitation undertakings by the departing shareholder, for a reasonable period.
- Warranties on the company’s position during the period in which the shareholder had management responsibilities.
- Payment security for the seller when payment is deferred — a pledge over the shares sold, for example.
- Release of personal guarantees the departing shareholder gave to the company’s banks or suppliers.
Avoid negotiating directly
Between partners who have worked together for years, direct negotiation mixes numbers with personal history. A neutral intermediary who runs the valuation and proposes structures separates the two and speeds up agreement.
GestInvest handles shareholder exits: independent valuation, financing structure, finding investors where needed, and support through to completion. Read more about our shareholder solutions or about shareholder disputes.
Frequently asked questions
Do the remaining shareholders have pre-emption rights?
Often, yes — under the articles of association, the shareholders’ agreement or the law, depending on the type of company. This should be confirmed with a lawyer before negotiating with third parties.
How long does a buyout take?
Once value is agreed, between two and four months. The valuation and the payment structure are the stages that take longest.
Will a bank finance the purchase of a partner’s stake?
It can, particularly if the company has stable cash flows and little debt. The bank will assess repayment capacity after the deal.
