Succession Planning and Securities-Backed Credit
Succession events often demand cash at the very moment when selling shares would cost the most. That is true of planned transfers, estate settlements, and generational buyouts alike. Securities-backed credit offers a structured alternative. It keeps the underlying holding intact.
The liquidity problem in succession
Founding families and major shareholders often hold most of their wealth in a single listed company. A succession event may come with retirement, the death of a patriarch, or a planned generational transfer. When it does, heirs and executors face competing demands. Estate taxes or equalisation payments to non-shareholding beneficiaries fall due. Legal and advisory costs mount. And the family must show, at once, that it can meet these costs without selling the core stake. Selling shares at such a moment often means a discounted price, a taxable event, and a market signal that control may be in flux. Each of these can weaken the very business the family spent decades building.
How a stock loan fills the gap
A securities-backed loan lets the borrower pledge listed shares as collateral and receive cash. Proceeds are a fraction of the pledged holding’s market value, and no standing band is published for that fraction. The loan-to-value is a property of the collateral rather than of the product: it is fixed only after a review of the actual shares, and it answers to their liquidity and average daily traded volume, price volatility, free float, how concentrated the stake is against the issuer and against the family’s wider wealth, the settlement and enforcement regime of the market of listing, the currency, and any lock-up or disclosure constraint. Beneficial ownership does not transfer. In most jurisdictions, the pledge does not trigger a disposal for tax purposes. The loan tenor commonly runs from twelve to thirty-six months. That gives the family time to arrange a more permanent capital structure. Interest accrues on the outstanding balance. It is not deducted upfront. The shares remain registered in the borrower’s name throughout the facility. For succession, this means the family can make estate equalisation payments, pay inheritance tax, and settle advisory fees. How family offices approach the same problem is covered in family offices and concentrated stock. The core shareholding stays intact throughout.
Structuring around estate timelines
Succession rarely happens on a convenient schedule. Black Haven works with borrowers and their legal advisers to align facility terms with the estate’s own timeline. Succession may span several jurisdictions — a French holding company, a Bahamas family trust, and a listed subsidiary, for example. In such cases the pledge structure can be layered to fit. Each tranche reflects the legal and regulatory requirements of the relevant domicile. Drawdowns can be phased to match the actual cash needs of the succession. They need not be drawn as one lump sum. This reduces needless interest cost.
Non-recourse structures and estate risk
A non-recourse facility may suit borrowers who worry about personal liability passing to their heirs. Under this structure, if the borrower defaults, recourse is limited to the pledged collateral. The borrower’s other assets — and by extension the estate — are not exposed. That protection matters in succession, where the ultimate obligor may change during the facility term. Black Haven offers both recourse and non-recourse structures. The choice between them forms part of the first structuring conversation.
Working with advisers
Securities-backed credit does not replace legal, tax, or estate-planning advice. It is one instrument in a broader succession toolkit. Black Haven engages constructively with the borrower’s existing advisers. It provides term sheets and facility documents in the format those advisers need for their own analysis. Confidentiality is maintained throughout. Details of the pledge, the loan amount, and the borrower’s identity stay strictly within Black Haven. They are not shared with third parties without explicit instruction.
Frequently asked.
01Can a stock loan be used to pay inheritance tax before a share transfer is completed?
02Does pledging shares for a loan affect the succession itself?
03What happens to the facility if the borrower passes away during the loan term?
Keep reading.
Funding a capital call from a listed portfolio: using securities-backed lending to meet private equity obligations
A capital call can arrive without warning. A securities-backed loan against listed shares can fund it faster than a sale, with less disruption.
Read → Use Cases · March 11, 2024The family office playbook for concentrated stock: financing, hedging, and long-term stewardship
Family offices with large single-stock holdings must weigh liquidity, control, and wealth across generations. Borrowing against the shares can help.
Read →A position to talk through?
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