Buying Out a Business Partner in Ireland: How to Fund a Shareholder Exit (2026)

You started the business together. Ten years on, one of you wants out. Maybe it's retirement, maybe a falling out, maybe just a different life.

Either way, you now have to find a lot of money to buy shares in a company you already half-own.

That's not a management buyout, and it's not buying a business either. It's its own animal, with its own tax traps, its own legal rules and a lender who already knows you. Get the structure right and the business barely notices the change. Get it wrong and you can spend years paying for an exit with money the company needed to grow.

Why a Partner Buyout Isn't an MBO or an Acquisition

People lump these together. Lenders don't.

In a management buyout, a management team buys a company from an owner who's leaving, usually with a stack of senior debt, vendor finance and sometimes outside equity. In a business acquisition, an outsider buys a business they've never run. Both guides cover those deals in depth.

A partner buyout is different in three ways that change the funding:

• The buyer already runs the business. There's no handover risk on the management side, and the lender can see your track record directly. That's a big plus.
• The seller knows exactly what it's worth. Valuation isn't a negotiation with a stranger. It's a negotiation with someone who knows where every euro is, and who may still be on the guarantees.
• Someone's skills walk out the door. If your partner ran sales or held the key client relationships, the lender will want to know who's replacing them and what it costs.

If you're in a professional partnership rather than a company, say a practice of solicitors, accountants or vets, the mechanics are different again. Our guide to practice buy-in finance covers how partnership interests are funded.

Company Share Buyback vs Buying the Shares Yourself

This is the decision that drives everything else. Here's the plain version.

Company buyback. The company buys the departing partner's shares and cancels them. You end up owning 100% without buying a single share personally. The catch: it must be paid for out of the company's profits available for distribution, it needs shareholder approval, and the tax treatment for the seller depends on meeting specific conditions.

Personal purchase. You buy the shares yourself. The company doesn't change. The catch: you're paying with your own after-tax money, or borrowing personally, and you pay 1% stamp duty on the share transfer.

Look at that "seller's tax" row carefully. Under Revenue's rules, a buyback payment escapes income tax treatment only if, among other things, the company is an unquoted trading company, the buyback is mainly for the benefit of the trade, the seller has owned the shares for at least five years (three if inherited), their stake falls by at least 25% and they're not connected with the company afterwards. A clean full exit usually ticks the last two. Miss the others and your partner could face income tax rates instead of CGT at 33%.

That gap can be big enough to sink the deal. So this is where your accountant earns their fee. Don't pick the structure because it's the one the lender prefers.

The Financial Assistance Trap Most People Miss

Say you go the personal purchase route and borrow the money yourself. The bank asks for security over the company's assets. Simple, right?

Not quite. Under section 82 of the Companies Act 2014, a company generally can't give financial assistance, including security or guarantees, for someone buying its own shares. There's a route to do it legally, called the Summary Approval Procedure, with directors' declarations, but it has to be done before the assistance is given. It can't be fixed afterwards.

It applies to holding company structures too, where a new company borrows to buy the shares and the trading company secures the loan. Your solicitor will know the drill. Just make sure they're involved before you sign a facility letter, not after.

Agreeing a Value You Can Both Live With

Start with your shareholders' agreement. Plenty of Irish agreements already say how shares are valued when someone leaves: by the company's accountant, by an independent valuer, or by a formula. Some include "good leaver" and "bad leaver" terms that change the price depending on why someone's going.

No agreement, or an old one nobody's looked at since 2014? Then you negotiate. And two questions come up every time.

Is there a minority discount? A 30% stake is usually worth less than 30% of the company, because it doesn't control anything. A 50% stake is murkier. Agree the basis up front.

Can the business actually afford the price? That's the lender's question, and it should be yours too. A valuation the company can't service from its own cash flow just moves the problem from your partner's exit to your future.

Our guide on how much a business can borrow explains how lenders work out what your cash flow can carry. Run that before you shake hands on a number.

Deferred Payments: Getting Your Partner to Fund Part of the Exit

Here's the most useful lever in a partner buyout, and the one owners underuse. Ask the departing partner to take part of the price later.

It makes sense for both of you. You borrow less, so the deal gets approved. They get a higher total price than a forced, all-cash deal would support, often with interest on the deferred part. And everyone's incentive stays lined up for a year or two of handover.

Three things to know before you agree terms:

• The bank will want to rank first. Expect the lender to require your partner's deferred payments to be subordinated, so they stop if the bank loan falls behind.
• Your partner will want security. Often that's a charge over the shares sold, or the right to some of them back if payments stop.
• Structure matters again. Whether deferred payments fit a company buyback or need a different structure is a legal and tax question. Get advice before you put numbers in heads of terms.

Worked Example: Funding a €600,000 Exit

Let's put numbers on it. Two 50/50 shareholders, and the company's valued at €1.2 million. One is leaving, so the price for their half is €600,000.

The business makes €320,000 a year before interest, tax and depreciation, after paying a market salary to whoever replaces the departing partner. After corporation tax, existing loan repayments and normal capital spend, about €210,000 a year is genuinely free.

Here's a structure lenders would recognise:

€210,000 of free cash against €138,400 of new commitments is cover of about 1.5 times. Lenders generally want at least 1.25, so this works, with room for a soft year.

Now try it without the deferred payments. Borrow €480,000 over five years and the repayments are about €117,000 a year. That's 1.8 times cover on paper. But the lender is now carrying twice the exposure, mostly unsecured, against a business that's just lost a key person. Plenty of lenders will balk, and the ones who don't will price it accordingly.

Bank vs Alternative Lenders for a Shareholder Exit

Your own bank is often the natural first call. It knows the account, it may already hold security, and if the business has assets or property it can lend on longer terms. The pillar banks will look hard at whether the remaining owner can run the business alone.

Alternative lenders move faster and can lend without property security, which helps when the bank's appetite runs out. Our fixed-term loans run from €30,000 to €300,000 over 12 to 48 months with fast decisions, which suits the senior loan in a deal like the one above.

Your assets can help too. If the company owns vehicles, plant or equipment outright, asset-based lending can release cash against them. And if existing loans are sitting on awkward terms, refinancing them at the same time can free up the cash flow the buyout needs.

Allow time. A clean partner buyout with agreed terms typically takes two to three months from first conversation to completion, longer if there's a holding company, a Summary Approval Procedure or a guarantee release to negotiate. Start the funding conversation when you start the valuation conversation, not when the solicitors are drafting.

Simplí doesn't arrange equity investment or commercial mortgages. If your exit really needs an outside investor or a property refinance, we'll say so.

What the Lender Needs: Shareholders' Agreement, Guarantees and a Handover Plan

When we take a partner buyout to lenders, this is the pack that gets it approved:

1. The shareholders' agreement and the signed heads of terms showing the price, structure and any deferred payments.
2. A valuation with workings, whether from the formula in your agreement or an independent valuer.
3. Three years of filed accounts, current management accounts and a forecast showing the business without your partner in it.
4. A personal guarantee plan. Your departing partner will want off every bank guarantee and lease guarantee they signed. Lenders don't release them automatically. Expect to replace their guarantee with your own, and agree that up front so it doesn't stall completion.
5. A handover plan showing who takes over your partner's clients, suppliers and responsibilities, plus a non-compete in the share purchase agreement.
6. Tax clearance and up-to-date CRO filings, including the change of directors once they step down.

The personal guarantee point catches more deals than anything else. Raise it on day one.

Fund the Exit So the Business Survives It

A partner buyout is one of the best deals you'll ever do, if it's structured around what the business can afford. Pick the right structure with your accountant first, protect yourself from the financial assistance trap with your solicitor, and agree a valuation your cash flow can carry.

Then build the funding: some company cash, a term loan sized on real surplus, and deferred payments that keep your partner invested in a smooth handover. Get the guarantees sorted early, and you come out the other side owning 100% of a business that's still got room to grow.

Frequently Asked Questions