How Creek Equity partners with a management team that wants to own the business

Some of the best companies Creek Equity looks at are not for sale in the usual sense. The owner is ready to step back, and the people who already run the business want to own it. They have the experience. What they usually lack is the capital.

That is a situation we are built for. On scottzack.net I wrote a longer piece on how a management buyout works from the owner's side. This note is about the other side of the table: what it looks like when Creek Equity partners with the management team.

We start with the people, not the price

Before we talk about valuation, I want to know whether the team can run the company without the owner. Do they make the day-to-day decisions now? Do they know the numbers without looking them up? Do the largest customers call them, or only the owner? If the answers are yes, the rest is a financing problem, and financing problems can be solved.

How the capital fits

A management buyout is usually funded from several places at once: the managers' own investment, a bank loan sized to what the cash flow can carry, often a note from the seller, and an equity partner. Creek Equity is the equity partner. Because we invest our own capital rather than a fund's, we can size our investment to what the deal needs. That often means less debt on the company at closing and more cash for the owner.

The managers put in real money too, even when it is a small share of the total. Ownership changes how people make decisions, and we want the team to feel it from the first day.

Who decides what

We usually take a control position, and sometimes a meaningful minority stake when that serves the business better. Either way, the structure is agreed in writing before closing: which decisions need our sign-off, how the managers can build their ownership over time, and what happens if someone wants to leave. The conversations that feel awkward before a deal are far more expensive after it.

What we do after closing

The managers run the company. That is the point. We agree on a plan, they report on it every quarter, and I am available when a decision is hard or a quarter goes badly. We add help where the team asks for it: a stronger finance function, a key hire, or capital for an expansion the business could never have afforded on its own.

Why we hold

A fund on a five-year clock has to sell the company again. We do not. That matters to a management team. They are not buying a business to prepare it for the next buyer. They are buying a business to run, and we are prepared to stay alongside them for as long as that takes.

If you own a Michigan business and your managers could be its next owners, or you lead a team that wants to buy the company you run, send me a note. The first conversation is with me directly.