How do investment funds finance a move to employee ownership?

Investment funds supply capital that helps a company buy itself on behalf of its employees. Depending on the fund, that can be equity, subordinated (mezzanine) debt, a senior loan, or purchasing the seller's note. Some funds aim for market-rate returns; others are concessionary and accept lower returns to make more deals work. The right fit depends on the deal size, the ownership model, and what the business can repay from its own profits.