Looking to restructure some debt stemming fromacquisitions and to fund the buyout of its majority owner, Tex-CapConcord Insurance Services—a Dallas-based insurance agency thatplaces commercial, personal and employee-benefits business—tappedOak Street Funding for a multimillion-dollar loan.

“Every deal of a decent magnitude will have its challenges. Withthis one, there was a lot of emotion around the ownership change;and the tax implications if the deal didn’t close in 2012 added a[pressing] time element,” says Rick Dennen, CEO of Oak Street,which has made some 1,700 loans since its founding in2003.

But the pace at which Oak Street—whose loan sizes range from$10,000 to $10 million—can respond is one of the financing firm’schief selling points over traditional capital sources.

“Speed, leverage and truly understanding the agency business arethe advantages we have,” says Dennen. “A bank has cheaper cost offunds than we do—so if we’re competing with a bank and it’s allabout the rate, then [the agency] is going with the bank. Butnine times out of 10, the agency will run into hurdles. Banks,especially in today’s market, are struggling to put commercial andindustrial assets on their books. Banks are often overzealous withwhat they think they can accomplish, and when the agency thatstarted going down that path hits a stop sign, they’ll call usback, and we jump right in.”

This knowledge of how an agency operates is precisely whatattracted Gaylon Brown, TexCap’s managing partner and CEO, to OakStreet. “What I really liked and what most impressed me is theyknow our business exactly: how we are structured, how we deal withcarriers, how our cash flows,” says Brown, whose book of businessis about 60 percent commercial, 25 percent personal and 15 percentbenefits.

“The whole process took about two months, andwe’re grateful for how quickly Oak Street responded. Like trueprofessionals, every time there was an issue, they showed theability and willingness to work through it,” Brown says, addingthat “the deal’s covenant structure is more to our advantage” thanwhat a bank could offer. As TexCap considers more acquisitions, “welook forward to perhaps funding them through Oak Street.”

The impact of this loan on the agency has been significant. WhenDennen arrived at Tex-Cap’s offices prior to that evening’s closingdinner, the entire office of approximately 45 employees gatheredaround him.

“You could really sense their joy of now being liberated tofocus on growth and executing on the strategy to elevate thisagency to next level,” says Dennen, who notes that it’s notuncommon for agency owners reaching retirement age to becomesomewhat inhibited about taking risks or making big changes. Thedeal also allowed TexCap to give ownership stakes to some of thetop-performing younger producers that it sees as itsfuture.