Leaving the Control Tower: Financing a Woodstock Management Buyout

The situation

Ji-ho worked overnight shifts as an air traffic controller, a job that paid well and demanded total focus for hours at a stretch. On his days off, for nine years, he did something almost nobody at the tower knew about: he ran the day-to-day operations of a small industrial calibration business in Woodstock that tested and certified precision instruments for manufacturers across the region. The business belonged to Eleni, a family friend who had built it from nothing and, as she moved into her sixties, wanted out.

Eleni had watched Ji-ho learn every part of the operation — the client relationships, the technician scheduling, the equipment servicing contracts — more thoroughly than any employee she had ever had. When she decided to retire, she did not put the business up for public sale. She offered Ji-ho first right to buy it, a structure known as a management buyout, where the person already running a business purchases it from the owner rather than an outside buyer coming in cold. Ji-ho had the operational knowledge. What he did not have was anywhere close to the roughly $3,200,000 the business was independently valued at, and he was not willing to hand in his resignation at the tower until he knew, with certainty, that the financing would actually come together.

His wife Sophia, an accountant, had spent years reviewing Eleni's financial statements informally, helping Ji-ho understand the numbers behind the operation he ran. She was ready to put her name on the deal too, both as a co-borrower and as the person who would eventually take over the company's books. The two of them came to us with a plan and a lot of moving pieces still unresolved.

The buyer's problem

A management buyout on this scale almost never closes on personal savings alone, and Ji-ho and Sophia's was no exception. Between them they had set aside roughly $500,000 over the years — a meaningful sum, but well short of the purchase price. Two further pieces needed to fall into place, and each carried its own risk.

• A bank term loan was available against the company's equipment and receivables, but the bank wanted to see the buyer's personal financial picture stabilized before committing, and it wanted first claim on the company's assets ahead of anyone else who might be owed money.
• A vendor take-back note from Eleni — her agreement to accept a portion of the price over time, paid out of the business's future earnings rather than in cash at closing — would bridge much of the remaining gap. Vendor take-back notes are common in Ontario business sales precisely because they let a buyer without full capital close the deal, and they signal that the seller believes the business will keep performing. But a note is only as good as its position behind other debt, and Eleni was not willing to be paid last with no protection if the business ran into trouble under new ownership.

Underneath both of those pieces sat a timing problem that was just as important as the money. Ji-ho was not willing to leave a stable, well-paying job at the tower until financing was firm, and the bank was not willing to finalize a loan to someone who might still be earning air traffic controller pay indefinitely rather than committing to the business full time. Each side was waiting on the other to move first.

What we did

1. Structured the purchase as a share sale. Our team confirmed the deal would proceed by Ji-ho and Sophia acquiring the shares of Eleni's corporation rather than buying its assets individually, which preserved the company's existing service contracts and calibration certifications without needing to renegotiate them with clients, and shaped how the purchase price was allocated for tax purposes.
2. Negotiated the vendor take-back note's ranking. We worked with Eleni's lawyer to document a note for roughly $700,000, repayable over several years from company cash flow, expressly subordinated to the bank's loan so the bank would be repaid first if the business ever struggled. In exchange, we secured Eleni a restriction on how much additional debt the company could take on without her consent, so her position could not be quietly pushed further back later.
3. Sequenced the closing around Ji-ho's resignation. Rather than have Ji-ho give notice at the tower before financing was certain, we built the purchase agreement's conditions so that the bank's loan commitment had to be issued and confirmed in writing before the transaction became unconditional. Only once that commitment was in hand did Ji-ho submit his resignation, timed so his last shift ended the week before closing rather than months of uncertain overlap.
4. Reviewed the bank's loan terms against the note. The bank's roughly $2,000,000 term loan required security over the company's equipment and receivables. We coordinated with the bank's counsel to make sure that security did not conflict with Eleni's subordinated note, and confirmed the personal guarantees Ji-ho and Sophia were being asked to sign were limited to the loan itself rather than open-ended.
5. Built a working capital adjustment into the agreement. The agreed price assumed a certain level of parts inventory and outstanding client invoices on closing day. We set a post-closing true-up so that if the actual figures came in lower, the price adjusted down automatically instead of leaving Ji-ho and Sophia to absorb a shortfall neither of them had priced into their budget.

The outcome

The bank issued its loan commitment on schedule, Ji-ho gave notice at the tower the same week, and the purchase closed roughly a month later. Between them, the roughly $500,000 in personal savings, the bank's roughly $2,000,000 term loan and Eleni's roughly $700,000 subordinated note covered the full $3,200,000 purchase price, with each piece clearly ranked against the others and no gap left for anyone to discover after the fact.

The working capital adjustment mattered almost immediately. The closing inventory count came in modestly below the figure assumed in the agreement, and because the true-up formula had already been settled in writing, resolving it took a short exchange of numbers between accountants rather than a renegotiation. Sophia, now handling the company's books directly, said afterward that having the mechanism agreed in advance made a small discrepancy feel routine instead of alarming.

A year on, the business has kept its client base intact, Eleni's note is being paid down on the schedule the agreement set out, and Ji-ho has settled fully into running the company he spent nine years learning on his days off. He has said since closing that the hardest part was never the operational side — he already knew that cold — it was trusting that the financing would actually be there before he walked away from a stable career to bet on it. Sequencing the resignation to the loan commitment, rather than the other way around, was what let him make that leap without a gap underneath him.

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