A BUYOUT IS A BALANCE SHEET EVENT.
A buyout does three things at once, and only one of them is obvious. Cash leaves, at closing or on a note, on a schedule that has nothing to do with when your jobs pay. Equity falls by the amount paid, so debt to equity rises even if you borrowed nothing. A surety reads that ratio before it reads your work history. Bonding capacity is sized from working capital and equity, so a buyout funded from the operating account can reduce the program in the same month you're trying to grow into it. The valuation method and the deal structure are separate questions, and the second one belongs to your attorney and your CPA.
This comes up most often between $3M and $8M of revenue, when two co-founders who built the company together want different things for the years ahead. One wants to grow and take bigger work. The other wants to slow down and take the money out. Both are reasonable. The mistake is agreeing on the number before anybody works out what paying it does to the company's ability to bond and mobilize the next job. Settle it in this order. First what the business can support, then what the departing owner is owed, then how the deal is written.
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WHAT IT MEANS.
A partner buyout is the purchase of one owner's equity by the company or by the remaining owners. It converts a share of ownership into a cash obligation and reduces equity by the amount paid.
A buyout can also happen with no disagreement at all. A buy-sell agreement funds the purchase of a partner's shares on death, disability or departure. If the company is the buyer, the company's balance sheet funds it. A buy-sell with no funding behind it is a promise to write a cheque the business may not be able to write. Review that document with your attorney and your insurance agent well before you need it.
Your surety and your bank will find out. A bonding program is renewed from your statements. If equity drops by a six figure sum with no operating explanation, that's the first thing an underwriter asks about. Tell them before they read it. Underwriters are far more comfortable with a funded buyout you explained to them than with one they discovered.
WHERE THE DEAL HURTS THE COMPANY.
The number gets agreed before the funding does
Two owners settle on a price because it feels fair. Then they find out what paying it does to the operating account. Cash for a buyout competes with mobilization, payroll and material buyout on the same Friday, and the buyout is the only one of the four with a fixed date on it. Test what the company can afford before you agree on the price.
Equity falls, so the ratios move against you
Paying an owner out reduces equity by the amount paid. That raises debt to equity even if you borrowed nothing to do it. Fund it on a note and equity still falls while liabilities rise, so the ratio moves twice. The CONTROL standard puts debt to equity below 1.0. A buyout is one of the few single events that can put a healthy company over it in a month.
Bonding capacity contracts at the worst moment
Sureties size a program from working capital and equity, and they read both from a work in progress schedule and a statement. A buyout takes cash out of working capital and takes the payment out of equity. So the program can tighten in the same quarter the remaining owner is trying to take on the larger work that caused the split. A clean exit then leaves a company that can't take on that work.
WHAT IT LOOKS LIKE IN DOLLARS.
Say a subcontractor has $900,000 of equity and $700,000 of total liabilities. Debt to equity is 0.78. Buy a partner out for $300,000 in cash, and equity falls to $600,000 while liabilities stay at $700,000. The ratio is 1.17. Fund the same $300,000 on a five year note, and equity still falls to $600,000 while liabilities rise to $1,000,000. The ratio is 1.67. Every figure in that example is illustrative math, and none of them is a benchmark. The ratio goes over the CONTROL ceiling of 1.0 under both structures, and the cash timing is the only thing that differs.
The CONTROL standard on the balance sheet has three numbers. Working capital is 10 to 15 percent of annual revenue, with 13 percent as the number to build toward. The current ratio is between 1.3 and 2.0. Debt to equity is below 1.0. A buyout moves all three in the wrong direction at the same time. Work that out before the deal closes, so you choose a structure the company can support and keep the bonding program you were trying to grow.
THE ORDER THIS HAS TO BE DONE IN.
First we model what the company can support, across cash, working capital, the debt to equity ceiling and the bonding program. That becomes the envelope the deal has to fit inside. We reverse the usual order on purpose. Two owners who negotiate inside a known envelope reach a deal the business survives. Two owners who negotiate without one may reach a deal it doesn't survive.
A lump sum, a note over several years and a note with a balloon all read the same in a summary. In a cash week they are completely different. Each structure gets tested in the 13 week forecast against the real job billing and payroll calendar, so the payment date avoids a cash trough.
We give the underwriter and the banker the numbers with the funding plan attached, before they get the statement that shows the equity change. Bonding programs and credit lines tighten on surprises far more than on bad numbers. An underwriter who hears about a funded buyout ahead of the statement usually keeps the program in place.
The purchase agreement, the entity consequences, whether the company or the remaining owners are the buyer, and every tax question inside the transaction are legal and tax work. We don't do either. We bring the math on what the business can support, in the format your advisors need to structure the deal.
THE OUTPUTS, NAMED.
FLAT MONTHLY FEE. NO SURPRISES.
Three tiers, priced by your trailing twelve month revenue. Which one you're in depends on how much of the work you want off your desk. We don't bill by the hour, and we don't do payroll. The one-time onboarding fee is in the table.
Built for subs doing $1M to $12M. Above $12.5M we quote.
| Last 12 months revenue | Core | Strategic | Platinum | One-time onboarding |
|---|---|---|---|---|
| Under $1M | $1,900 | $3,100 | $3,300 | $2,500 |
| $1M to $3.5M | $2,600 | $4,100 | $5,300 | $4,500 |
| $3.5M to $6.5M | $3,800 | $5,900 | $8,300 | $6,000 |
| $6.5M to $9.5M | $5,100 | $7,600 | $11,800 | $7,500 |
| $9.5M to $12.5M | $6,100 | $8,900 | $14,900 | $9,000 |
| Above $12.5M | Quoted | Quoted | Quoted | Quoted |
The onboarding fee covers migrating your books back to the start of your last taxable year and getting you fully operational in 60 days. It's billed once, with your first invoice. It's the same for all three tiers, and it moves with your revenue band. Your first month is prorated, and your monthly engagement starts on the first of the first full month.
Just want the setup? Onboarding only is the same onboarding work with no monthly service after it, one time, at the onboarding fee plus $2,000. Start a monthly engagement later and $2,000 counts toward it. It starts at $4,500, and the price for every band is on the pricing page.
The three tier columns are the whole price. Which one fits depends on how much of the work you want off your desk. No payroll. No hidden line items. The onboarding fee is right here in the table.
- Online software only: QuickBooks, Sage, Viewpoint and similar. No VPN or hosted desktop.
- Not in any tier: payroll, pay applications, collections on receivables.
- Pricing valid through 2027.
CFO work. Your own bookkeeper keeps doing the books.
We build your plan every month. Your team does the work.
You get the CFO work: job costing built to match the way you estimate, a 13 week cash forecast, WIP every month, and a monthly meeting that ends with decisions.
Your bookkeeper still does the books.
Core, plus bookkeeping and bank reconciliations, plus job costing and WIP software set up and managed for you. Use your own online accounting software or we supply it, one price.
We build the plan, track it and adjust it every month.
We only work with trade subcontractors. We know what to look for, and we fix problems while they're still small. Everything in Core, plus the bookkeeping and bank reconciliations done for you, and the job costing and WIP software set up, loaded with your cost codes, and managed every month. Use your own online software, or move to ours and we pay for it.
Our team does the bookkeeping and the reconciliations. We don't do payroll.
Strategic, plus a controller who handles payables and receivables the way an in-house controller would. You approve every payment.
We manage the money side for you, every week.
Everything in Strategic, plus our team does the controller work. We handle your bills and receivables the way an in-house controller would: we call vendors, pay the bills and keep the accounting current. We plan the cash flow first, and you approve every payment because it is your money.
Our team does the payables and receivables. We don't do payroll, pay applications or collections.
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