When one partner wants out of an A/E firm and the other does not, the remaining partner can buy the departing stake with bank financing rather than personal cash. That is the resolution most co-founder deadlocks are looking for, and it is available far more often than either partner assumes. The obstacle is usually not the money. It is that neither one wants to be the one to raise it.
Why the deadlock happens
Two people founded the firm. One has reached the point where they want their capital out and their weekends back. The other is often within a few years of the same decision, which is exactly why they hesitate. Taking on the departing partner's stake feels like signing up for another decade right when they were starting to think about their own exit.
There is no version of this that someone else solves. It is a founder issue, and it stays unresolved until one of them puts it on the table. Firms lose years here, and the cost of those years is real, because a firm drifting toward two reluctant owners is not a firm anyone is investing in.
Valuing one partner's stake
The firm gets valued as a whole first, then the departing stake is a share of it. Firms in the $1M to $10M in sales range generally trade at 5x to 7x EBITDA, or 2x to 4x SDE for smaller owner-operated shops, and on a bank-financed deal an independent valuation specialist sets the number the lender will finance against.
Expect a discussion about whether a partial interest is worth a proportional share. A 50 percent stake in a two-person firm is not the same asset as 50 percent of a firm with a deep bench, and the party being bought out is generally not in a position to sell to anyone else. Getting a third party to set the value takes that argument out of the room, which is worth a great deal when the two people arguing have worked together for twenty years.
The remaining partner already owns the answer
Here is the part that changes the conversation. Because the buying partner already holds equity in the firm, lenders can treat that existing stake as part or all of the required equity injection. That can reduce, and sometimes eliminate, the additional cash the remaining partner needs to bring to the table.
The firm's cash flow repays the loan, not the buying partner's savings. That is the same mechanic that makes employee buyouts work, and it applies just as cleanly when the buyer is already an owner. Our partner buyout page walks through how these are structured.
The departing partner is paid at closing rather than monthly over the years a typical partnership agreement contemplates. Most buy-sell agreements written at founding call for the firm or the remaining partner to pay out over five or ten years. That was the only option available when it was drafted. It is not the only option now.
If the remaining partner truly does not want it
Then the answer is not to force it. A partner who buys in reluctantly at 60 is a problem deferred, not solved. The alternative is selling both stakes together, either to employees below them or to an outside buyer, which frequently produces a better outcome for both founders than one of them grinding out another decade.
Our post on younger partners buying out the senior partner covers the version where the next generation is ready to step up.