From Operator to Owner: Structuring a Seamless Management Transition

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Nº 017

Financing Breakdown

Risks

Material leverage increase within a cyclical, project-based business

Scenario

Acquisition

Industry |

Construction

Key Challenges

Higher pro forma leverage

Project-based revenue model

Succession/transition risk

Loan Type

Acquisition Term Loan

Outcomes

Ownership Transition

The capital enabled the first tranche of a smooth ownership transition while preserving a long-standing banking relationship

De-Risked Structure

Deal structure moderated pro forma leverage, ensured long-term alignment between new and existing owners, provided ample working capital coverage, and guaranteed an efficient process for the remainder equity buyout.

Lender Type

Private Credit

Bank

Result |

Succession Plan Enabled

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Overview

Structuring a Management Transition

Diamond Willow structured an initial $8 million acquisition term loan to facilitate the first tranche of a management buy out, enabling a long-time employee to transition into ownership.

The borrower specializes in underground shallow utility installation for residential, multi-family, and commercial developments across Edmonton and Central/Northern Alberta. When the foundersought to transition ownership and the existing lender declined the loan, the borrower’s professional advisors brought in Diamond Willow to assist in structuring atransaction that would minimize financial strain from the initial buyout, alignseller, buyer, and borrower incentives, lower transition risk, and ensure a smooth final purchase in three years.

The result was a carefully structured transaction that balanced succession objectives with lender discipline

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Testimonial

“What can I say about Diamond Willow, other than they are amazing!!

I had already tried to get this management buyout done, but the structure was just not workable. Diamond Willow helped rework the transaction in a practical way that made sense for the business, preserved working capital, and aligned the risk properly. The biggest win was that they structured it in a way that allowed our existing bank to step up and provide financing.

I have heard this pitch from a few other different merger & acquisition groups before, so I was very skeptical. Diamond Willow totally delivered on everything they said they would and more. They put the deal out to thirteen banks, ten of the thirteen banks offered to fund the deal. The three that said no, only did so because the deal wasn’t large enough for them.

I would highly recommend Diamond Willow and Grant to anyone thinking on selling their business.”

The Challenges

Increased leverage resulting from the management buy-in
Cyclicality inherent in a project-based construction business
Execution risk associated with ownership transition

Risk Mitigants

Designed a two-staged acquisition and financing plan that moderated opening pro forma leverage and preserved liquidity during the transition period
Minimized transition risk through aligned incentive structure, keeping both parties economically invested

Structuring a Management Transition

By proactively addressing lender concerns around cyclicality and transition risk, Diamond Willow successfully advised on deal structuring and arranged the required $8 million financing – ultimately through the Company’s existing lending partner. What began as a succession discussion became a thoughtfully engineered ownership transition — protecting legacy while empowering the next generation of leadership.

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