Proceeds from a succession/recapitalization loan are used by incoming ownership to begin repurchasing the existing owner's membership interests or stock using a treasury stock approach. Equity is redistributed among succession owners.The loan can be structured as a one-time event or a multiple year transaction and buy-out. As a non-SBA lender, we have the flexibility to work with you to create a customized succession plan. Here is an example, for illustration purposes only*:
*Based on annual valuation formula and annual loan proceeds tranche. The annual valuation gives opportunity for the seller to derive benefit from the results of the next two years of business production. Buyer, valuation and purchase similar to “dollar cost averaging”. Oak Street Funding does not provide any valuation. Subject to terms and conditions of loan documents being met over payout period.