How a Customized Lending Solution Secured a Company’s Ownership Transfer

Thoughtful preparation and on-hand capital are necessary for businesses facing growth opportunities. But even in times of success, companies must continuously look forward to the next milestone—and avoid any stumbling blocks—to scale and maximize bottom lines. With personalized support from a knowledgeable financial partner, businesses can pursue growth and mitigate risks using customized financing solutions. 

When faced with the retirement of a company owner, an international freight forwarding company came to First American Bank to facilitate a private ownership transfer. Our extensive knowledge of private and government-sponsored capital and diverse resources allowed us to provide the working capital needed to complete the buyout and support the company’s next era of growth.

See how our team of lending experts helped a company  in the midst of expansion leverage a combination of SBA lending, business credit line, and a seller note to maintain private company ownership.

Ensuring private company ownership 

During a period of unprecedented supply chain disruptions, this freight forwarder maintained an impressive growth record. However, the company still faced a looming obstacle related to private company ownership. One of its owners was about to retire, leaving the minority owner with a deep long-term commitment to the company but insufficient shares for complete ownership. 

The company discussed the prospect of the minority owner purchasing the remaining business shares and the two parties decided on a multi-million dollar purchase agreement.

However, the company lacked the capital and the collateral to facilitate the purchase agreement for a traditional loan. Without sufficient financial backing, the company faced the prospect of selling shares to a competitor or a private equity firm.

A working capital boost

The controlling shareholder wanted to allow his long-time minority partner to be able to buy him out without sacrificing the value he would receive from an outside well-capitalized buyer. The company weighed its financial partner options and selected First American Bank as the catalyst to solving this complex situation and secure the company buyout without having to sell to an outside party. Understanding the need for a fast and robust capital injection, our team proposed a creative solution that leveraged the SBA’s 7(a) loan program with a longer amortization term to meet ongoing working capital requirements.

Future growth opportunities

Thanks to the customized SBA loan structure, the company was free to proceed with a transaction that met its goals: maintaining private company ownership and securing enough working capital to support future growth. The company and new owners are now well positioned to continue their growth trajectory and weather turbulent times in today’s uncertain economic environment.

Financial health with adaptive partnerships

The unexpected can stall goals or open opportunities. A devoted financial partner provides companies with customized strategies to overcome the unexpected or capitalize on windows of opportunity. 

No matter a company’s size or sector, First American Bank’s team of lending experts and financial advisors have the breadth of experience and resources to provide tailored financing solutions and support to meet each client’s goals.