Transaction
Dividend re-cap: a cashflow loan to allow ownership to withdraw funds from the business for personal investment.
Published financing features
- Loan amortized over 5 years with the ability to accelerate payment at client discretion
- Preferred interest rate
- No personal guarantees
Published client benefits
- Client controls cashflow
- Client grew personal net worth
- Kept control of the business while capitalizing on a portion of its intrinsic value
- No personal guarantees
How this kind of financing works
A dividend recapitalisation lets an owner take value out of a company without selling any part of it. The business borrows against its own cash flow and distributes the proceeds to shareholders. It is the alternative to a partial sale for an owner whose wealth is concentrated in a single private company and who wants to diversify without giving up control.
Because the loan is serviced by the company, the analysis is entirely about cash flow: whether earnings cover the new debt service with enough headroom to absorb a bad year, and whether the business can still fund its own growth afterwards. A recapitalisation that leaves nothing for working capital solves one problem and creates another.
Amortisation and prepayment rights shape how much flexibility the owner keeps. The ability to accelerate payments at the borrower's discretion means a strong year can be used to clear the debt early rather than being locked into a schedule. Where a facility is arranged without personal guarantees, the borrowing sits with the company rather than the shareholder — which is usually the point of the exercise.
Historical example only. It is not a promise of terms, availability, or results for a future transaction.
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