Can anyone help with Majority Buyouts?

January 27, 2026

by a searcher from Carleton College in Burlingame, CA, USA

Hey All, I am looking for feedback on a phased buy-in/buy-out structure. Business: owner-operated (project based manufacture), Adj. EBITDA 3 year avg ~$350k, most recent year ~$500k. Seller has health issues and wants to step back. Seller is flexible and will likely keep the real estate (lease to OpCo) (I can eventually purchase). Goal: I step in as the operating owner now (with a salary), buy control up front or via an earn-in, and the seller keeps a minority stake + receives seller-note payments/distributions until I buy them out. Structure I’m leaning toward (conceptually): Day 1: I acquire 51–80% (control) via small cash down + seller note sized to sustainable cash flow (and after my salary). Seller retains 20–49% equity + continues helping on sales/relationships part-time. Put/Call in 3–5 years for the remaining stake at a pre-agreed formula (to avoid renegotiation after I grow it). Bridge “avg $350k vs last year $500k” via earnout/kicker tied to maintaining higher EBITDA. My Questions: - Best practices on control buy-in + seller minority (governance, deadlock, distributions)? - How do you structure buyer salary + seller note so it’s fair and doesn’t starve growth? - Most common pitfalls with put/call valuation formulas and earnouts? - Would love any sample terms, “don’t do this” lessons, or structures that worked. Thank you in advance! -John

Reply by a searcher
from University of Pennsylvania in Los Angeles, CA, USA

Hi John! Sounds interesting - some thoughts below: 1) You could theoretically still structure this as an asset transaction with a Seller rollover. I would try to keep the Seller's governance minimal, as you'll be the majority. I would offer tax distributions, which is something you'd want too 2) Make the term long (10 years like an SBA note), have standby periods for as long as the Seller will take, etc. It'll help smooth over the transition 3) I think the only downside to the put/call is that if you're growing the business, you'll technically pay more than buying 100% today. I would structure them as 'calls' as opposed to 'puts' to make sure you have downside protection in case there was something wrong with the business

Reply by a searcher
from Western Michigan University in Grand Rapids, MI, USA

This type of transaction definitely adds to the deal's complexity, and you are asking the right questions. When working with clients with this type of structure, we will approach it more from a partnership formation perspective than a true acquisition. You can nail the acquisition side of the deal, but still end up with a partner problem. And those are expensive problems to solve.

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