Funding Founder Control: Credit-Fueled Buybacks Rise
Key Highlights
Founder buybacks surge. Founders are reclaiming equity to regain control, using loans and non-dilutive funding.
Market pressures drive action. High costs and low valuations push founders to “bet on themselves.”
Private credit fuels the shift. $1.5T+ in private capital enables fast, flexible buyout financing.
Long-term control, short-term risk. Buybacks realign vision but increase leverage—discipline is critical.
Smart strategy wins. Align stakeholders, structure deals carefully, and plan for downturns.
Perfect timing for global founder buybacks enabled by private credit
Introduction
In boardrooms across industries, a quiet power shift is underway: founders are buying back control of their companies – and they’re increasingly using creative financing to do it. After years of ceding equity to venture capital, private equity, or corporate acquirers, entrepreneurs in 2025 are seizing the driver’s seat again.
From tech startups to consumer brands, founders are leveraging abundant private credit and other funding avenues to reclaim ownership when strategic visions diverge or market conditions sour. It’s a trend driven by necessity and opportunity: investors get liquidity, while founders get a second chance to “protect what we’ve built and make sure we’re going in the right direction,” as Chobani’s Hamdi Ulukaya said when he regained majority control of his yogurt empiremodernretail.co.
This founder-led buyback wave speaks to deeper shifts in the financial landscape – and it carries important implications for companies navigating today’s volatile markets.
Why Founders are Reclaiming Companies in 2025
Ample funding from non-traditional lenders is greasing the wheels of these buyouts. Private credit – lending by specialized investors outside of banks – has boomed into a $1.5 trillion industry, drawing in pensions, insurers and other big institutions.
Unlike cautious banks, these private lenders move fast and tailor deals to fit unique situations. In fact, private credit has expanded from about $1 trillion in 2020 to ~$1.5 trillion at the start of 2024, and it’s projected to soar to $2.6 trillion by 2029.
Amid tighter bank lending standards, borrowers value the speed, certainty and flexibility of private credit solutions. This means founders looking to finance a buyback have more options than ever – from direct loans to mezzanine debt or structured capital. Private credit funds are increasingly willing to back management buyouts and recapitalizations, stepping into deals that once required a deep-pocketed equity sponsor.
In short, a founder who wants to buy out an investor can now tap a growing pool of opportunistic capital eager to fund such “unsponsored” deals.
The motivations behind founder-led buybacks are as much emotional as financial. Often it comes down to control and long-term vision. Entrepreneurs pour their soul into a business, so it’s painful watching an outside owner steer it astray. Many have sold stakes during boom times only to later regret loss of control.
Now, facing a cooler investment climate, some founders see a chance to get their “baby” back. There is a growing trend of founders buying back their companies after selling a stake, specifically to regain greater control over the business. As one analysis notes, today’s founders “want to protect the businesses that they’ve built” – especially after a challenging few years of rising costs, inflation, and a VC funding drought.
Under those pressures, founders are taking the long view: ensuring their company’s survival and mission in a tougher environment, even if it means personally raising cash to buy out investors.
Real-World Examples underscore this Trend
Warner Bros. Discovery, 2024 - Sold back cycling media brand GCN (Global Cycling Network) to its original founder Simon Wear, who reclaimed a majority stake in the company he started. The deal came with painful belt-tightening (20 layoffs were announced) but returned control of the content and vision to the founder.
Sirona, 2025 - The founders of feminine care startup Sirona bought their company back from the Good Glamm Group, a large consumer conglomerate, after just two years. Good Glamm was cash-strapped and shifting priorities, prompting Sirona’s founders to swoop in and “reclaim the brand” rather than see it sidelined.
As Sirona’s CEO explained, “The goal was never just to sell, make money, and move on… with Good Glamm’s changing priorities, we felt the best way forward was to reclaim the brand and lead its next phase of growth ourselves.” This emotional drive – to preserve a company’s soul and mission – is a common thread in founder buybacks.
Beautycounter, 2023 - Founders also act when an investor’s timeline or performance falls short. For instance, Beautycounter’s founder Gregg Renfrew bought back her beauty line from private equity firm Carlyle in 2023 after sales faltered and the brand even went into foreclosure under PE ownership.
Rhone, 2022 - In another case, the co-founders of activewear brand Rhone raised new funding via a special purpose vehicle to buy back a minority stake from PE firm L Catterton. By doing so, they eliminated an outside investor and welcomed new backers more aligned with their vision.
Nate Checketts, Rhone’s co-CEO, said regaining that stake created a “mindset shift” internally – allowing the team to hire better talent and make long-term decisions without pressure to “take shortcuts” for quick returns. In short, founder buybacks can refocus a company on sustainable growth instead of short-term metrics.
Even at large companies, misalignment with public investors or activists can drive management-led buyouts.
In Japan, for example, management buyouts (MBOs) at listed companies have accelerated to their fastest pace in more than a decade as executives face intensifying shareholder activism and governance pressure.
2023 saw the highest number of takeover proposals in Japan since 2010, fueling predictions that more CEOs will take their firms private to escape market scrutiny and focus on long-term restructuring.
Globally, we’re seeing a similar story: when outside shareholders demand outcomes that clash with a founder’s long-term plan, an MBO or founder-led buyout becomes an attractive escape hatch.
The current market turmoil and volatility play a role too – valuations of many startups have dropped from their peak, making buybacks more affordable. (In Sirona’s case, industry buzz noted that Good Glamm had acquired the brand for a much higher sum than what the founders paid to buy it back, illustrating how a downturn can create a buy-low opportunity for founders.)
Meanwhile, some investors are eager to free up cash amid volatile markets, even considering sales of private assets that rarely traded before. This gives founders an opening to negotiate buybacks or recapitalizations on favorable terms.
The rise of private credit and secondary funding markets is enabling these founder moves.
When equity markets were frothy, a discontented founder had few options beyond persuading a friendly investor to buy out the rest.
But now, with private credit funds sitting on record amounts of capital, financing exists specifically for these scenarios.
“Private equity firms alone have $1.6 trillion in “dry powder” ready to deploy, and they’re increasingly open to deals that “return capital to founders” as part of exit plans”
In practical terms, a founder can partner with a private investor or lender to structure a buyout: for example, taking a loan secured by the business’s assets or future cash flows, or selling a non-core division to raise cash for a share repurchase.
A recent deal by Huda Beauty illustrates this creativity.
The Dubai-based cosmetics company wanted to free itself from an early private equity backer (TSG Consumer). The solution? Sell off its fragrance line (KAYALI) to a new investor, General Atlantic, in a move that let the owners buy back TSG’s stake.
Co-founder Mona Kattan teamed with General Atlantic to carve out KAYALI as an independent entity, which in turn provided the liquidity for Huda Beauty’s founders to increase control over the main business.
This kind of two-step deal – part divestiture, part buyback – shows how credit-fueled and investor-fueled maneuvers can combine to get the desired outcome.
Finally, some founder buybacks are born of sheer last resort. When a company is on the brink, the founder may be the only one willing to bet on a turnaround.
For example, convenience store startup Foxtrot was abruptly shut down and its founder is now helping to relaunch it – effectively buying it back from collapse.
And in one of the most dramatic cases, WeWork’s ousted founder Adam Neumann bid over $500 million in 2024 to buy back the company he once led to a $47 billion valuation. WeWork had fallen into bankruptcy, and Neumann (along with rumoured partners) saw an opportunity to regain the reins at a fraction of the former value.
While it’s unclear if his bid will succeed or how he’d finance it, the attempt underscores a pattern: founders are often willing to step in when others flee, using any financing they can muster to rescue or revive the enterprise they believe in.
Similarly, 23andMe’s CEO and co-founder Anne Wojcicki made an offer to take her publicly traded company private in early 2025, teaming up with private equity firm New Mountain Capital to fund a $74.7 million buyout of remaining shareholders.
Public markets had lost faith in 23andMe – its stock plummeting from multi-billion-dollar heights to pennies – but the founder’s move (backed by PE capital) signaled her conviction in the company’s future away from Wall Street’s glare.
Klar Viewpoints
#1
The resurgence of founder-led buybacks in 2025 is a clear sign that the balance of power is shifting toward company builders. In an era of plentiful private capital, founders with a strong vision no longer feel hostage to misaligned investors or public markets.
If growth-at-all-costs expectations or corporate bureaucracy threaten the company’s mission, founders now have the leverage to engineer an exit for those investors – effectively turning the tables by purchasing the stake back.
This empowerment changes the negotiation dynamic between founders and investors: both sides know that if things go south, a well-connected founder might refinance the cap table and assert control.
In short, founders have more bargaining power than they did a decade ago, thanks to deeper capital markets willing to bet on visionary individuals.
#2
The rise of credit-fueled buybacks highlights a broader shift toward long-term strategic thinking over short-term gains.
When founders buy out external shareholders, it often frees the business from near-term exit pressure. We see companies emerging from these transactions with a renewed focus on sustainable growth, innovation, and core values.
For example, after Giuseppe Zanotti (the luxury shoe designer) repurchased the 30% stake held by L Catterton to regain full ownership in 2025, his company declared it the “start of a new chapter” with a refreshed strategy and continuity of vision. Without a PE fund expecting a 5-year return, Zanotti can now invest patiently in product heritage and global distribution.
This underscores how founder control, once re-established, can benefit a company’s stakeholders: decisions can prioritize brand integrity, employee culture, and customer loyalty over meeting a quarterly target.
In 2025’s uncertain economy, that long-term lens can be a competitive advantage.
#3
However, founder-led buybacks also introduce new financial risks and require careful navigation.
Replacing equity investors with debt (or expensive preferred equity) means companies must shoulder new repayment burdens. A buyback funded by loans adds leverage to the balance sheet, which can strain cash flow and limit agility if not structured prudently.
Companies emerging from these transactions in 2025 often have less room for error – they must execute strongly to service debt acquired in the buyout.
From a macro perspective, we interpret this trend as a double-edged sword: it allows visionary founders to steer the ship through rough waters (which can preserve and create long-term value), but it also concentrates risk. The founder is “all in” – often reinvesting personal wealth or taking on debt – and the business might lack the cushion of outside equity if a downturn hits.
For companies, this means resilience and prudent financial planning are more important than ever when undergoing a founder-led buyout.
Implications and Strategies for Companies
With founder buybacks becoming more common, what does this trend portend for the next few years? And how should business leaders respond? Here are two forward-looking predictions to consider:
More Founder/PE Take-Privates
We anticipate an uptick in public-to-private deals led by founders partnering with private equity or private credit funds.
Stagnant public market valuations and activist pressures will likely drive more CEOs of mid-cap companies to emulate the 23andMe approach – team up with patient capital to go private and restructure out of the spotlight. If interest rates stabilize or decline modestly, the cost of debt will ease, further fueling these founder-led take-privates.
In the next 2–3 years, expect a handful of high-profile companies to quietly exit the public markets this way, especially in tech and consumer sectors where founders still hold sway.
Founder Buybacks in Emerging Markets
The founder buyback phenomenon will not be limited to the U.S. or Europe.
We foresee more founders in emerging markets buying back stakes from global investors as well. Early foreign investors in emerging-market startups may look to exit due to shifting strategies or need for liquidity, giving local founders a window to reclaim ownership.
A case in point: in 2024, the co-founders of Bangladesh’s logistics startup Paperfly bought out the entire 82% stake held by their Indian venture investor. That deal was motivated by the investor’s exit plans and the founders’ confidence in the business’s future.
Going forward, as capital flows tighten, similar “homecoming” buyouts could happen in markets like India, Southeast Asia, and Africa – founders doubling down on their companies when foreign backers pull back.
Recommendations
Assess Investor Alignment & Exit Options
Companies should regularly evaluate whether their investor group remains aligned with the long-term strategy. If not, consider proactive solutions – for example, arranging a secondary buyout where a discontented investor is bought out by a new stakeholder or by the founders themselves. It’s wise to map out these scenarios before conflicts escalate.
Boards can facilitate frank discussions about investor timelines and, if needed, seek replacement capital (through family offices, secondary funds, or management-led SPVs) to avoid value-destructive infighting.
By treating a potential founder buyback as just another strategic option, you demystify it and can approach it methodically rather than as an act of desperation.
Leverage Alternative Financing Strategically
If you’re a founder or CEO contemplating a buyback, carefully structure your financing mix. Private credit and direct lenders can offer bespoke loans to fund a buyout – but negotiate terms that give the company breathing room (e.g. manageable covenants, or payment-in-kind interest for the first years).
In some cases, mezzanine debt or revenue-based financing might be preferable to straight loans, to ease cash flow strain. Also consider partial measures: you might not need to buy out 100% of an investor’s stake; sometimes a minority recapitalization can increase your control (as seen when Rhone’s founders redeemed L Catterton’s minority stake).
The key is to align your capital structure with your business plan – don’t take on short-term debt for what is fundamentally a long-term turnaround.
Focus on Post-Buyback Performance & Governance
Regaining control is not the finish line – it’s the start of a new chapter that must prove the wisdom of the buyback. After a founder-led buyout, double down on operational excellence and sustainable growth to meet those new debt obligations and justify the renewed independence. Stakeholders (from employees to creditors) will be watching closely.
Develop a clear 24–36 month plan to improve margins, reignite growth, or streamline costs as needed under the new ownership structure.
Maintain transparency and strong governance even if you’ve gone private or shed outside investors – this builds trust and keeps potential future investors comfortable.
For example, Giuseppe Zanotti, after buying out his PE partner, emphasised continuity and immediately set a refreshed strategy focusing on product innovation and brand heritage.
Likewise, any company in 2025 that undergoes a management buyout should outline how the change in ownership will translate into better execution. Treat your new lenders or backers almost like a board – keep them informed and confident in the course you’ve set.
Scenario Plan for Downside Risks
Engage in rigorous scenario planning around the buyback. What if the economy dips further or revenue underperforms post-buyout?
Ensure the company has financial buffers or contingency plans for a downside case – e.g. an option to refinance the debt, bring in a silent partner, or even re-sell a portion of equity if needed. Founder-led doesn’t have to mean founder-alone; consider assembling a small coalition of long-term oriented co-investors to share the load (much like how some founders have consortiums of friendly investors backing their buyout).
This can provide not just capital but also sounding boards for strategy. The bottom line: treat a leveraged buyback like a strategic transformation – hope for the best but prepare for headwinds so that the company isn’t jeopardized by the very move that was meant to save it.
By embracing these strategies, companies can turn the founder buyback trend into a value-enhancing move rather than a risky plunge.
When executed thoughtfully, a credit-fueled buyback can realign ownership with vision, inject renewed purpose, and set the stage for long-term value creation – essentially delivering the best of both worlds (founder passion and sufficient capital) for the business.
FAQ
What key factors should a founder consider before using credit to repurchase equity?
The instinct to reclaim control is powerful—but founders must weigh emotional drivers against financial realities. Before proceeding, assess your company’s cash flow, debt tolerance, and post-buyback runway.
We advise founders to model multiple scenarios: What if growth stalls? What if interest rates rise? A successful buyback requires more than capital access—it demands disciplined execution, investor alignment, and a 24–36 month strategic plan to unlock long-term value.
Consider consulting with strategic financial advisors who understand non-dilutive capital structuring and market timing.
How do founder-led buybacks change a company’s risk profile—and how should businesses manage that shift?
Buybacks shift ownership—but they also shift risk. Replacing outside equity with private credit or leveraged debt often means higher fixed obligations. The margin for error narrows. Post-buyback, founders must focus on operational excellence, margin improvement, and lender confidence.
We recommend treating lenders like partners: maintain transparency, communicate strategic KPIs, and anticipate liquidity needs well before covenants tighten. Risk management isn’t just about buffers—it’s about building the agility to respond when markets move against you.
In what situations is a founder buyback not the right move—and what are the smarter alternatives?
A founder buyback isn’t a cure-all. If a company lacks stable cash flow, has unresolved governance issues, or is facing a structural decline, leveraging up to buy out equity can do more harm than good.
We often advises founders to explore partial recaps, structured secondaries, or investor rotation instead—non-dilutive options that realign cap tables without overleveraging the business. The best strategy often lies not in taking full control, but in creating a capital structure that supports your vision and the company’s resilience.
Always ask: What problem are we really solving—and what’s the least risky way to solve it?
Disclaimer
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