Case Study • Acquisition
The Bank Said No.
The Deal Closed Anyway.
How a restructured deal turned a bank rejection into an $8M close.
By Grant Daunheimer, Partner — Diamond Willow Advisory
Published • June 16, 2026
$8M
Acquisition term loan
12yrs
Buyer's tenure with the company
3yrs
Staged founder exit
Many good succession plans stall because the person ready to run the business cannot afford to buy it. That rarely means the company needs expensive private capital. More often, the business can support a bank loan, and the structure just has to match what a lender can
That is what Diamond Willow does. We help companies understand their borrowing capacity and secure financing from lenders when conventional lending fails.
Background
After more than fifteen years of bootstrapping his company from nothing, the founder of an Alberta-based underground utility contractor was ready to step back from the day-to-day and ease into retirement.
He had built the business on a few basic principles: show up on time, put in the work, do what you say you will, and accept that you cannot do it alone. Over the years he grew the company alongside a team he came to know and trust, the people who helped him do exactly that.
Retirement
The founder wanted the business carried on by the same people who had helped build it. To him it was more than an asset to sell to the highest bidder. It was a legacy worth preserving, and a life-changing opportunity for someone willing to take on the risk and lead its next chapter.
Succession
He saw that potential in a long-serving employee who had spent more than a decade with the company.
Over twelve years the man had worked his way up from project manager to general manager, and now had a shot at the top job. He knew the crews, the customers, the jobs, and the stress of keeping a project-based business moving. He had earned the founder's trust the slow way, by showing up for years and taking on more each time it was offered.
Over twelve years the man had worked his way up from project manager to general manager, and now had a shot at the top job. He knew the crews, the customers, the jobs, and the stress of keeping a project-based business moving. He had earned the founder's trust the slow way, by showing up for years and taking on more each time it was offered.
Coming to Terms
When the time came, the two sat down, agreed on a price, worked out terms they could both stand behind, and shook on it.
The terms were simple. The founder would cash out over a few years, step back from the day-to-day, and help finance the buyer, whose only stake was the equity in his home and the future earnings of the business. All they needed now was the bank.
Most management buyouts are built the same way. Since the buyer rarely has the full price in cash, the purchase is funded by a mix of bank debt and seller financing, usually a vendor take-back the seller is repaid for over time out of the company's cash flow, which keeps the seller invested in a smooth handover.
Both knew the company had the fundamentals a bank likes to see: stable cash flow, very little debt, a yard of equipment owned outright, a regional bank relationship going back years, and a reputable accounting firm keeping the books.
Both knew the company had the fundamentals a bank likes to see: stable cash flow, very little debt, a yard of equipment owned outright, a regional bank relationship going back years, and a reputable accounting firm keeping the books.
Declined by the Bank
When the founder and buyer brought the deal to the company's long-standing regional bank, the issue was not the business. The bank knew the company, understood the relationship, and had years of history with the account.
The problem was the structure.
The buyer was a proven operator without the outside capital to buy the company outright. That meant the purchase had to lean on the business itself, just as the borrowing was rising and the founder was preparing to step back. In the way the deal was first presented, that was more transition risk than the bank could take on.
The financing was declined, and the two were left with a good business, a willing seller, a capable successor, and no clear path to close.
The founder talked it over with his accountant, who knew the company well and figured the financing was doable if the deal were put together differently. He introduced the founder and buyer to Grant Daunheimer at Diamond Willow.
Over a handful of meetings, Grant went through the statements, the asset base, the contracts, and the rest of the deal documents. He saw what the accountant had seen: a sound business and a deal a bank could get behind, once the mechanics were rebuilt around what it needed to see.
The founder talked it over with his accountant, who knew the company well and figured the financing was doable if the deal were put together differently. He introduced the founder and buyer to Grant Daunheimer at Diamond Willow.
Over a handful of meetings, Grant went through the statements, the asset base, the contracts, and the rest of the deal documents. He saw what the accountant had seen: a sound business and a deal a bank could get behind, once the mechanics were rebuilt around what it needed to see.
"Around 80% of the buyouts that reach us come after a bank has already said no — with the owner assuming the only option left is a private or alternative lender at a much higher cost. Most of the time the business is perfectly bankable. The risk just has to be arranged in a way the bank can underwrite."
— Grant Daunheimer, Partner, Diamond Willow Advisory
How DW Structured the Deal
Diamond Willow rebuilt the financing around the deal the two had already agreed to, shaping it into something a bank could underwrite while making sure the debt would not bury the company if times got tight or the handover did not go to plan.
The revised structure had four parts: an $8 million acquisition term loan, phased ownership, conservative borrowing, and a vendor take-back from the founder to support the buyer.
With a structure the numbers could support, Diamond Willow took it to market, running a competitive process to find the lender willing to meet the agreed terms at the best rate.
With a structure the numbers could support, Diamond Willow took it to market, running a competitive process to find the lender willing to meet the agreed terms at the best rate.
.png)
01.
$8M acquisition term loan
Conservatively sized against demonstrated cash flow — protecting the business on the downside if times got tight or the handover did not go to plan.
02.
Phased ownership transfer
Kept the company from carrying the full purchase at once, smoothing transition risk across a defined timeline.
03.
Conservative borrowing
Headroom built into the structure so the business could absorb downside without breaching covenants.
04.
Vendor take-back
The founder finances part of the purchase himself — keeping him invested in seeing the transition through and signalling confidence to the lender.
Results
The financing closed at $8 million with [final lender, to be confirmed whether this was the same regional bank that first declined the deal].
Over the next three years the founder will step back in stages, staying on to support the handover, passing off what he used to carry, and guiding the new owner as he takes the company and the team into their next chapter.
A Note from Grant Daunheimer, Partner, Diamond Willow
A lot of Canadian business owners are reaching the point where they want to step back, and their accountants and lawyers usually see it coming first. A management buyout is one of the better ways for those owners to take money off the table, protect what they built, and hand the business to people who already know how to run it.
