While all deals are unique, the following is an example of an InHouse Recap we have facilitated on behalf of a 42 year old owner. Originally, he wanted to sell his business to protect his family by diversifying his estate and to reward himself for 15 years of hard work. However, while his brain told him a sale was the right thing to do, his heart was telling him otherwise. He believed in the company and felt that it would be considerably more valuable in the future. While he did not mind having sophisticated investors involved in his company, he definitely did not like the idea of losing ownership/control.

Once we understood his real issues, we devised an InHouse Recap as an alternative. When we explained it to him, he was enthusiastic about it because it appealed to both his brain and heart.

After Valufinder initially explained to me the pluses and minuses of their InHouse Recap, I felt I would be morally negligent in not providing for my family if I did not explore this further. I was very glad I did. - 42 year old Entrepreneur

Working with a "one stop" financing source which is a major lender to the Leveraged Buyout market (LBO), we created in general terms the following structure for the owner:

• The financing source would lend the company roughly 3.4 times its adjusted EBITDA. The company, in turn, would declare a special dividend equaling this amount to the owner.
• Portions of the debt were secured with a low interest rate and certain pieces of the debt were unsecured with higher interest rates.
• The senior debt will be amortized over a 5 year period and the subordinated debt will require interest-only payments until the senior debt is retired. Subordinated debt will be amortized between years 5 and 8 after closing.
• Both the owner and financing source had excellent chemistry and agreed that the lender would purchase warrants and common stock directly. Together these investments represented 9% of the common equity. The investments were based on a valuation of 6.5 times adjusted EBITDA.
• No personal guarantees of any kind were given by the owner.
• Total financing including debt and equity was 4.2 times adjusted EBITDA.

The net effect of this InHouse Recap is that the owner will receive in cash 64.6% of the value of his company while still owning 91% on a go forward basis. He satisfied his desire to provide his family with financial security, continued to control his own destiny and gained a sophisticated financial partner to help him grow his business.

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