Owner Buy-Out (OBO): Turning Part of Your Business Wealth into Cash

Quick answer. An owner buy-out (OBO) is a structure in which the owner sells part of their company's shares to a holding they control, financed by a loan. They thus secure part of their company's value in cash, while staying in charge and keeping potential for future gains. Well designed, it combines liquidity, leverage and transfer preparation; poorly designed, it exposes to abuse of law and over-indebtedness of the target.

The owner buy-out, or "selling to yourself", answers a common situation: an owner holds most of their wealth in the shares of their own company, with no liquidity. They wish to secure part of that value — to diversify, prepare for retirement or fund a project — without selling the company or losing control.

The principle: the owner creates (or uses) a holding company that buys back part of their shares. The holding funds this purchase with a bank loan, repaid through the dividends paid up by the operating company. The owner cashes in the price of the shares sold to the holding — their cash-out — while remaining the majority shareholder of the holding, and thus master of the whole.

The OBO sits at the crossroads of a partial sale and a prepared transfer: it organises, calmly, a first step of liquidity.

1. Value the business on solid grounds: the holding's purchase price must reflect a defensible valuation, on pain of reassessment.
2. Set up the buyout holding, controlled by the owner, possibly opened to co-investors or managers.
3. Have the holding buy back part of the shares, funded by a bank loan (the acquisition debt).
4. Collect the cash-out: the owner receives the price of the shares sold to the holding.
5. Repay the debt through dividends paid up from the operating company, optimised by the parent-subsidiary regime or tax consolidation.

The OBO rests on a triple leverage. Financial leverage first: the holding borrows to buy, and the company's profitability services the debt. Tax leverage next: the parent-subsidiary regime largely exempts the dividends paid up (subject to a share of costs), and tax consolidation allows the loan interest to be offset against the group result. Legal leverage finally: by staying the majority shareholder of the holding, the owner keeps power while having secured cash.

Two schemes coexist, often combined.

Direct sale to the holding. The owner sells part of their shares and realises a capital gain, taxed in the year of the sale. For a sale of shares in 2026, the rate is the 31.4% flat tax (12.8% income tax and 18.6% social levies), as detailed in our article on the taxation of share sales.

Contribution of shares to the holding (contribution-sale). When the owner contributes part of their shares to a holding they control, the contribution gain benefits from a deferral under Article 150-0 B ter of the Tax Code. This deferral lasts as long as the holding keeps the shares; if the holding sells within three years, keeping the deferral requires reinvesting at least 60% of the proceeds in an economic activity within two years. This mechanism, covered in detail in our guide on contribution-sale and Article 150-0 B ter, allows part of the shares to be contributed under deferral while only the sold fraction is cashed in.

Far from being an end in itself, the OBO often fits into a multi-stage transfer path. The first deal secures part of the value and brings managers or investors into the holding's capital where relevant. A few years later, a second deal — sale of the balance, full exit or family transfer — completes the process, often on improved price terms thanks to the growth sustained in between.

This two-stage logic has several advantages. It spreads the tax, taxing the gain only on the fraction actually sold at each stage. It gives the owner time to organise their operational succession and reduce dependence on their person, which supports the value of the second sale. It finally allows a management team to be gradually associated, aligned by their stake in the holding.

We stress one point: an OBO only makes sense if the business can, tomorrow, do without its owner. Without that organisational autonomy, the second sale will face the same key-person discount as any poorly prepared transfer. The OBO and the reduction of owner dependence are therefore inseparable: the first secures cash, the second secures future value.

OBO with managers joining. The holding can welcome key managers into its capital, turning the OBO into a first step of an internal transfer and aligning interests.

Family OBO. The structure can prepare a transfer to children, combining a gift of shares and a buyback by a holding, subject to coordinating the schemes.

Small, low-profit business. The OBO requires the capacity to service debt: on a business with low or irregular profitability, financial leverage becomes a risk rather than an asset.

• Abuse of law. An OBO driven by a purely tax purpose, without economic substance, can be recharacterised under Article L. 64 of the tax procedure code. The structure must answer a genuine wealth and entrepreneurial logic.
• Over-indebtedness of the target. Too heavy an acquisition debt weakens the business and burdens its investment. The debt must be sized on a prudent dividend projection.
• Valuation. A buyback price overvalued and disconnected from reality exposes to reassessment; an undervalued price may raise other difficulties. The valuation must be documented.
• The Article 150-0 B ter reinvestment. If the holding sells within three years, the 60% reinvestment obligation must be anticipated so as not to lose the deferral.

Recently, a profitable SME owner approached us: they held almost all their wealth in their company and wished to secure part of its value without ceding control or leaving. We structured an OBO combining a contribution of a fraction of the shares under deferral and a sale of another fraction to the holding, funded by a loan sized on a prudent dividend projection. The owner secured significant liquidity, kept the majority and prepared a later transfer to their team.

The OBO is a powerful but demanding tool. Its success rests on three conditions: real profitability to service the debt, a defensible valuation and economic substance that dispels any suspicion of abuse of law. Our role as chartered accountant is to ensure its financial and tax solidity, and to align the structure with the owner's wealth strategy.

A final word on timing: an OBO is best prepared when the business is healthy and banks lend willingly. Setting it up in a hurry, under the pressure of an immediate liquidity need, leads to accepting too heavy a debt or an unfavourable valuation. Anticipation, here as throughout a transfer, remains the owner's best ally.

Hayot Expertise advice. Never design an OBO as an isolated tax optimisation, but as a step in a wealth and transfer strategy. Size the debt on prudent profitability, document the valuation and anticipate the Article 150-0 B ter obligations. We model the structure end to end, from valuation to the repayment projection.