Capital use · Succession & transition
You do not have to sell the whole company to take some of the value out of it.
- Partial sale 20–40%
- Minority or majority
- Staged exit over 3–7 years
- Managers or family can buy in
A partial sale lets an owner sell part of the company, take cash out, keep an income and a say, and plan a full transition over three to seven years. Blue Ring Venture Capital members invest $50K–$5M per company in established Canadian $1M–$25M-revenue businesses — minority or majority, depending on how much you want to hand over — and help build the management depth a later sale, buyout or family transfer requires.
Six succession routes, compared honestly
Several of these combine. The most common pattern our members see: a partial sale now to de-risk the owner, then an MBO or third-party sale in three to seven years with a stronger management team and cleaner books.
| Route | Cash to owner now | Control after | Typical timeline | Where it goes wrong |
|---|---|---|---|---|
| Sell 100% to a strategic or PE buyer | Highest, but often 20–40% deferred or earned out | None | 9–18 months | Earn-out disputes; culture change; buyer walks late |
| Sell to family | Low; often a vendor take-back over years | Shared, then none | 2–5 years | Family tension; successor not ready; owner never lets go |
| Management buyout (MBO) | Medium; managers rarely have the equity | Shared, then none | 1–3 years | Managers cannot raise the down payment; bank wants owner guarantee |
| Employee ownership trust (EOT) | Medium, paid over time; a Canadian capital gains exemption has applied since June 2026 | Board role | 12–24 months to set up | Complexity; trust must be funded from profits |
| Partial sale to an operating partner | 20–40% of value now | Majority, if you are staying in charge | 3–5 months | Wrong partner; unclear buy-back terms |
| Partial sale + planned MBO or EOT | Now and later | Staged | 3–7 years | Nothing, if the plan is written down and the managers are developed |
Tax treatment differs by jurisdiction and structure; talk to your accountant. The lifetime capital gains exemption in Canada and the EOT exemption have conditions.
How a partial sale works
Cash now. Control kept. A path for the rest.
A member group buys 20–40% of the company — sometimes as common shares, more often as preferred shares with a dividend and a buy-back right — and the proceeds go to you, not into the business. If you are staying in charge you keep the majority, your salary and your role; if you are ready to step back further, members will take 50% or more and run the transition with you. One member joins the board.
Over the next three to seven years the plan does three things: builds a management layer that can run the company without you, cleans up the books and contracts so the company is saleable, and lines up the eventual buyer — your managers, an EOT, a family member with financing, or a third party. When that happens, the members are bought out alongside or before you.
- Typical partial sale: 25% of a $4M-revenue, $600K-EBITDA company at a 3.5–4.5× multiple → roughly $525K–$675K to the owner before debt and tax
- Owner keeps 75%, salary and the chair
- Managers get an option or a purchase plan tied to the eventual buyout
- Members' buy-back priced by formula, not by argument
Fits well when
- You are 5–10 years from a full exit
- The company is profitable and would be worth more with a second layer of management
- You have managers or family who could own it, but not the money to buy it yet
- You want liquidity without handing the company to a stranger
The Canadian toolkit
What the public programs cover, and what they leave out
The lifetime capital gains exemption on qualifying small-business shares, the permanent employee-ownership-trust exemption in force since June 2026, and BDC's Growth & Transition Capital are the main public tools for a Canadian owner planning an exit. Succession Ontario, launched in February 2026, trains advisors and offers a free valuation tool.
What none of them offer is the thing most owners actually want: a way to take real money off the table now without handing the company to a stranger. The standard exit menu lists a full sale, a family transfer, an employee trust or closing the doors. A partner who buys part of the business and stays involved is missing from it — which is why owners rarely hear the option exists.
- Bring your accountant in before the first member meeting
- Ask about the LCGE and EOT rules that apply to your structure
- Federal and provincial programs can sit alongside members' capital
- Members can suggest advisors in Windsor and London who do this daily
Succession questions
Can I sell part of the company and stay in charge?
Yes, and that is the most common shape. You keep the majority and run the business; the members' rights are limited to a board or observer seat, monthly reporting and a short list of major decisions, and the buy-back terms are agreed up front. The stake is minority or majority, so if what you actually want is to step back over the next two years rather than the next ten, say so — members will take 50% or more and structure the handover around it. What they will not do is take a position you have not agreed to.
Does the money go to me or to the company?
In a partial sale, to you. Some owners choose a mix — part to themselves, part to fund the growth that will make the eventual sale worth more. Both are common and both can be structured.
How is the company valued?
For companies in this range, a multiple of normalized EBITDA or seller's discretionary earnings, cross-checked against comparable transactions. Members will show their work. A stake below 50% usually carries a modest discount to a control valuation; a buy-back formula removes most of the argument.
What if my managers want to buy but cannot afford it?
That is the most common situation our members see. A partial sale now plus a purchase plan for the managers — funded from profits, a bank loan and possibly a vendor note — is a proven route. Members help design it and often stay through the buyout.
What about my key employees' equity?
Option plans, phantom equity and staged share purchases can all sit alongside an outside partner. The important thing is to decide the end state first — who owns what in year seven — and design backwards.
Talk to people who have done this
Fifteen minutes to apply. A named person replies within 48 hours.
Written by The Blue Ring Venture Capital team. Last reviewed .
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