Using Sale-Leasebacks to Fund Dividend Distributions Without Tapping the Revolver

In today’s capital-constrained environment, CFOs must balance liquidity preservation, covenant management, and distribution expectations, all while ensuring operational continuity. One underutilized option that can relieve pressure quickly is the sale-leaseback.

If your company owns equipment that is still in use but no longer tied to active financing, you may be sitting on a source of non-dilutive liquidity. A sale-leaseback allows you to unlock that capital without taking on new debt, drawing down the revolver, or interrupting daily operations.

What Is a Sale-Leaseback and Why It Matters for PE-Backed Companies

A sale-leaseback is a financing structure where a business sells its owned equipment to a leasing partner, then leases it back under customized terms. The business retains full use of the equipment while gaining immediate liquidity.

This strategy is particularly relevant for private equity-backed companies that need to manage distributions, working capital tightness, and short-term capital events.

Common asset categories include:

• IT infrastructure such as servers, laptops, or AV systems

• Material handling or warehouse equipment

• Medical or diagnostic machines

• Floor-level manufacturing systems

The key benefit is immediate capital injection, without introducing new debt or equity dilution. The structure is simple, efficient, and operationally non-disruptive.

How This Structure Supports Dividend Planning and Liquidity Events

Distributions often coincide with fiscal close or bonus season, both of which put pressure on cash availability. Instead of adjusting borrowing capacity or delaying payouts, sale-leasebacks let you:

• Fund distributions without impacting credit lines

• Preserve revolver capacity for true contingencies

• Create capital runway without affecting debt covenants

• Maintain balance sheet optics ahead of audits or exit prep

Lease terms can be tailored to match the company’s budget cadence, which allows monthly payments to align with cash flow cycles and seasonal variation.

What to Evaluate Before Executing

A sale-leaseback is relatively easy to implement, but thoughtful planning increases the value. Consider the following before moving forward:

• Asset eligibility: Equipment should have at least 24 to 36 months of useful life and no upcoming replacement needs.

• Strategic timing: Avoid using assets that are part of a near-term refresh, relocation, or integration.

• Tax and accounting treatment: Work with your controller or CPA to understand how this will affect your financials.

• Internal approvals: Coordinate early with operations, IT, and procurement teams to streamline execution.

How CoreTech Can Help

CoreTech helps PE-backed firms convert underutilized equipment into operational capital. We handle asset valuation, structure custom lease terms, and coordinate delivery to ensure fast execution with minimal lift from your internal team.

If you are planning distributions, navigating a seasonal cash dip, or preparing for a liquidity event, this strategy can help unlock between $500,000 and $5 million in cash without compromising business performance.

Email info@coretechleasing.com to review your asset list and estimate capital potential.