425: Live Oak V to Merge with Teamshares in $746M Deal

Live Oak Acquisition Corp. V announced a definitive merger agreement with Teamshares Inc., a tech-enabled acquiror of small-to-medium enterprises, valuing the combined company at $746 million.

Summary

• Live Oak Acquisition Corp. V (LOKV) has entered into a definitive Agreement and Plan of Merger with Teamshares Inc., a tech-enabled acquiror of small-to-medium enterprises (SMEs).
• The transaction values the combined company at a pro forma enterprise value of $746 million, based on a pre-money equity valuation of $525 million.
• A fully committed Private Investment in Public Equity (PIPE) of $126 million, anchored by accounts advised by T. Rowe Price Investment Management, Inc., will be executed at $9.20 per share.
• The transaction is 100% primary, with net proceeds, including up to $237 million from Live Oak V's trust account (assuming no redemptions), totaling up to $333 million, to be used for acquiring new operating subsidiaries and driving compounding growth.
• Existing Teamshares shareholders will receive up to 6.0 million additional earnout shares of Live Oak common stock, contingent upon the stock meeting price targets of $12.00, $15.00, and $20.00 per share during the 5-year period following the Closing.
• Live Oak Sponsor V LLC will allocate up to 1.7 million founder shares to an earnout, vesting at $12.00 and $15.00 per share.
• Teamshares founders are subjecting their roll-over equity to a four-year lock-up, with an early release provision if the company's stock price exceeds $25.00 per share for 20 trading days within any 30-trading day period, commencing 150 days after closing.
• Existing Teamshares shareholders are expected to maintain approximately 57% ownership in the combined public company.
• Teamshares currently operates 87 subsidiaries with consolidated LTM revenue of over $434 million (as of June 30, 2025) across more than 40 industries and 30 states.
• The company targets acquisitions of SMEs with $0.5 million to $5 million in EBITDA, at 4-6x target EBITDA multiples, and aiming for 15-20% unlevered free cash flow yields.
• The combined company is expected to be Pro Forma Adjusted EBITDA positive at the time of the deSPAC transaction.
• The Business Combination is anticipated to close in the second quarter of 2026.

Sentiment

Score: 8

Explanation: The filing outlines a strategic merger with significant capital infusion, strong growth projections, and a differentiated business model in an underserved market. The management team has relevant experience, and shareholder alignment is emphasized through earnouts and lock-ups. While risks are present, the overall tone and presented opportunities are highly positive.

Positives

• The transaction's entry multiple of 11.2x 2027E Pro Forma Adjusted EBITDA is attractive, representing a significant discount compared to programmatic acquiror peers who trade at a median of 17.4x.
• A fully committed PIPE of $126 million, anchored by T. Rowe Price, provides substantial primary capital to fuel Teamshares' acquisition strategy and growth.
• Strong shareholder alignment is evident through meaningful earnout economics for existing Teamshares shareholders and long lock-up periods for founders, vesting at performance-based share price targets.
• Teamshares' tech-enabled platform facilitates efficient and programmatic acquisition and integration of SMEs, demonstrating a scalable model.
• The company has a proven acquisition throughput, having closed 7 companies in a single month and $8.5 million in EBITDA in a single quarter.
• A high 86% hiring success rate for Presidents since 2023 ensures robust leadership capacity for acquired operating companies.
• Programmatic control of cash flow, which is tech-enabled and increasingly automated, allows for efficient reinvestment into new acquisitions, driving compounding growth.
• Teamshares targets strong unlevered returns (15-20% FCF Yields) and a 40% target ROE (before growth) from its acquisitions.
• The company reported 16% year-over-year organic EBITDA growth in 1H 2025 for companies owned for more than 12 months.
• Platform productivity continues to scale due to technological leverage, targeting over $3.5 million in incremental EBITDA per incremental platform-level employee hired.
• The public listing is expected to provide lower cost and more ready access to capital, accelerating Teamshares' opportunity to scale as a market-defining leader.
• The diversified portfolio across 40+ industries and 30 states mitigates single industry concentration and multiple inflation risks.

Risks

• Live Oak may not obtain the required shareholder approval to consummate the Proposed Business Combination.
• Live Oak's sponsors, directors, and officers have potential conflicts of interest in recommending the Proposed Business Combination.
• The ability of Live Oak's public shareholders to exercise redemption rights could deplete the trust account, diminishing capital available to the combined company.
• Securities of companies formed through SPAC combinations may experience a material decline in price post-combination.
• Live Oak's due diligence review may not have identified all material issues or risks associated with Teamshares' business or industry.
• If the valuation attributed to Teamshares is not representative of its actual value, the trading price of combined company shares may suffer, leading to potential investment loss.
• Live Oak's shareholders will experience significant dilution as a consequence of the Proposed Business Combination and related financings.
• Significant transaction costs may exceed current estimates, diminishing capital available to the combined company.
• An active trading market for the combined company's securities may not be consistently available, affecting liquidity.
• There are no current plans for the combined company to pay cash dividends for the foreseeable future.
• The combined company's reported operating results may fluctuate significantly or fall below investor expectations.
• Following the consummation of the Proposed Business Combination, the combined company may be subject to an increased risk of securities class action litigation.
• The combined company may be unable to obtain additional financing to fund its operations or growth.
• There is no assurance that the combined company will meet or comply with Nasdaq's initial or continued listing standards.
• Teamshares' principal revenues are expected to be earned through its subsidiaries, creating dependence on operating companies for cash.
• Teamshares' recent growth rates may not be indicative of its future growth.
• Future revenue and operating results will be harmed if Teamshares is unable to acquire new companies, retain existing ones, or expand its operating company base.
• Revenues and profits generated through acquisitions may be less than anticipated, and Teamshares may fail to uncover all liabilities of acquisition targets.
• Teamshares may need to incur additional indebtedness or seek capital through new equity or debt financings to support its growth strategy.
• Teamshares' acquisition cycle can be long and unpredictable, requiring considerable time and expense.
• If Teamshares is deemed an investment company under the Investment Company Act, it may face burdensome compliance requirements and restricted activities.
• Failure to offer high-quality support could harm Teamshares' business and reputation.
• Teamshares' operating companies may never achieve or sustain profitability.
• Teamshares faces intense competition from well-established companies and may lack sufficient resources to maintain or improve its competitive position.
• Teamshares depends on its senior management team, and the loss of key employees or inability to attract and retain skilled personnel may adversely affect its business.
• Estimates of market opportunity and forecasts of market growth may prove inaccurate, and Teamshares' business may fail to grow at forecasted rates.
• A cyberattack, security breach, or other unauthorized access to information technology systems could disrupt business and lead to significant liability.
• Teamshares relies on third-party data hosting and transmission services, and interruptions or poor service could impair platform delivery.
• Teamshares' use of open-source software could subject it to litigation or unwanted license conditions.
• Changes to applicable tax laws and regulations or exposure to additional income tax liabilities could affect Teamshares' business and future profitability.

Future Outlook

Teamshares expects to accelerate its growth as a public company, leveraging lower cost and more ready access to capital for programmatic acquisitions. The business model aims for predictable, repeatable growth, with reinvestment of free cash flow from operating subsidiaries into new acquisitions. The company anticipates generating meaningful and predictable earnings growth and reaching a self-funding inflection point faster with the deSPAC proceeds.

Management Comments

• "We are proud to partner with Teamshares and look forward to supporting the Company as it accesses the public capital markets. As a tech-enabled acquiror of high-quality SMEs, Teamshares will benefit immediately from a lowered cost and more ready access to capital." Richard Hendrix, Chairman and CEO of LOKV.
• "The Teamshares business model allows them to reinvest free cash flow from their operating subsidiaries into attractively priced additional acquisitions providing a long-term compounding pathway that we believe will create tremendous shareholder value." Richard Hendrix, Chairman and CEO of LOKV.
• "With family succession becoming rarer and not enough buyers, retiring owners face a 70% failure rate when trying to sell. Teamshares is a scalable platform that helps owners retire, businesses grow, and employees earn stock. We aim to be the permanent home for thousands of high-quality businesses going through ownership transitions." Michael Brown, Co-founder & CEO of Teamshares.
• "We are proud to partner with Live Oak and other investors to accelerate our entry in the public markets and scale as a market-defining leader." Michael Brown, Co-founder & CEO of Teamshares.

Industry Context

The U.S. SME market faces a structural need, with millions of businesses owned by Baby Boomers approaching retirement and a high (70%) failure rate in selling due to a lack of buyers and family succession. Teamshares positions itself as a unique, tech-enabled programmatic acquiror addressing this illiquid market, differentiating from traditional private equity or individual buyers. It aims to provide a 'permanent home' for SMEs, offering stability and capital access. The company benchmarks itself against other programmatic acquirors, noting their historical compounding growth and outperformance of the S&P 500.

Comparison to Industry Standards

• Teamshares' entry multiple of 11.2x 2027E Pro Forma Adjusted EBITDA is attractive, significantly below the 17.4x median of identified programmatic acquiror peers.
• Teamshares is unique among its peers for its specific focus on small business opportunities ($0.5M-$5M EBITDA) within the United States, leveraging a tech-native platform for diligence, acquisition, and integration.
• Compared to global programmatic acquirors like Constellation Software (TSX: CSU) with 11.7x 2027E EV/EBITDA and a global vertical software focus, Teamshares targets a broader industry agnostic approach within the U.S. SME market.
• European peers such as Addtech (OME: ADDT B) at 21.2x, Indutrade (OME: INDT) at 14.5x, Lifco (OME: LIFCO B) at 20.7x, Lagercrantz Group (OME: LAGER B) at 20.5x, and Volati (OME: VOLO) at 16.4x 2027E EV/EBITDA generally operate with higher multiples and often have more specialized industrial or medical technology focuses, primarily in Europe.
• Vitec Software Group (OME: VITEC) at 13.5x 2027E EV/EBITDA focuses primarily on software in Europe, contrasting with Teamshares' broad industry diversification.
• Teamshares' projected 2026E-2027E EBITDA growth is characterized as 'leading growth characteristics' driven by its proprietary, tech-driven acquisition and integration engine, implying a favorable comparison to industry growth rates, though specific peer growth rates are not provided in the filing.

Management Changes

Corporate Governance

Related Party Transactions

• Sponsor Letter Agreement: Live Oak Sponsor V, LLC (Sponsor) agreed that up to 1,150,000 Founder Shares are subject to forfeiture and will vest only if certain share price targets are achieved. The Sponsor may also use an additional 1,150,000 Founder Shares to incentivize investors in Transaction Financing, with 50% of any remaining subject to earnout and the other 50% forfeited for cancellation.
• Insider Letter Agreement Amendment: An amendment to the letter agreement dated February 27, 2025, between Live Oak, Sponsor, and Live Oak's directors/officers, adds Teamshares as a third-party beneficiary and amends the lock-up terms for Founder Shares to conform with the Significant Company Holder Lock-Up Agreements.
• Significant Company Holder Lock-Up Agreements: Certain Teamshares shareholders (Significant Company Holders) entered into lock-up agreements restricting the transfer of Restricted Securities for six months after Closing, subject to early release conditions.
• Management Lock-Up Agreements: Each member of Teamshares' management team entered into lock-up agreements restricting the transfer of Restricted Securities for four years after Closing, subject to early release conditions (including stock price targets or employment termination without cause).
• Non-Competition and Non-Solicitation Agreements: Each member of Teamshares' management team will enter into non-competition and non-solicitation agreements for a period of two years after the Closing, in favor of Teamshares and Live Oak.

Stakeholder Impact

• Shareholders (Live Oak): Will experience significant dilution due to the issuance of new shares but stand to benefit from the growth potential of the combined entity. Their redemption rights are a key consideration in the transaction's funding.
• Shareholders (Teamshares): Will roll over 100% of their equity into the combined company and have the potential to receive additional earnout shares, aligning their long-term interests with the company's performance. Founders are subject to a four-year lock-up.
• Employees (Teamshares and acquired SMEs): Will benefit from the adoption of an Incentive Plan for equity and equity-based awards, aligning their interests with the company's success. Teamshares' model also emphasizes helping employees earn company stock in acquired businesses.
• Customers (of acquired SMEs): The 'permanent home' model aims to provide enhanced continuity and stability for the businesses and their customers, potentially leading to improved service and relationships.
• SME Owners (retiring): Teamshares offers a structured and credible exit strategy for retiring owners, addressing the high failure rate in selling small businesses and ensuring a legacy for their companies.
• Creditors: The transaction involves existing debt facilities and new financing arrangements. The Trust Account Waiver by Teamshares and the Seller Representative protects the funds held for Live Oak's public shareholders.

Next Steps

• Live Oak will continue out of the Cayman Islands and domesticate as a Delaware corporation (Domestication) prior to the Closing.
• Merger Sub will merge with Teamshares (First Merger), with Teamshares surviving as a wholly-owned subsidiary of Live Oak.
• Immediately following the First Merger, the Surviving Corporation will merge with Merger Sub II (Second Merger), with Merger Sub II surviving as Teamshares LLC.
• Live Oak and Teamshares will prepare and file a Registration Statement on Form S-4 with the SEC, including a proxy statement and prospectus.
• Live Oak shareholders will hold an Extraordinary General Meeting to vote on SPAC Shareholder Approval Matters, including the merger, domestication, issuance of shares, name change, new organizational documents, Incentive Plan, and board appointments.
• Teamshares stockholders will obtain the Required Company Stockholder Approval, either at a special meeting or by unanimous written consent.
• Live Oak's name will change to Teamshares Inc., and new amended and restated organizational documents will be adopted.
• An Incentive Plan for equity and equity-based awards to eligible service providers will be adopted and approved.
• A post-Closing board of directors, consisting of up to nine individuals (including two designated by Live Oak, three by Teamshares, and the CEO/President), with a majority of independent directors, will be appointed.
• SPAC will file an effective registration statement on Form S-8 for shares issuable under the Incentive Plan within five business days following the expiration of the 60-day period after filing current Form 10 information.
• Teamshares will deliver PCAOB-audited financial statements for fiscal years ended December 31, 2023 and December 31, 2024 to Live Oak within 30 days following the date of the Merger Agreement.
• The Business Combination is anticipated to close in the second quarter of 2026.

Key Dates

Recommendation

The merger with Teamshares presents a compelling investment opportunity due to its highly scalable, tech-enabled programmatic acquisition model in the underserved SME market. The attractive entry multiple relative to peers, significant capital infusion from the PIPE and trust, strong organic growth, and clear path to self-sustaining growth through reinvestment of free cash flow are strong positives. The alignment of management and existing shareholders through earnouts and long lock-up periods further de-risks the investment. The public listing is expected to unlock faster and cheaper capital, accelerating its market-defining leadership.

Keywords

Teamshares, Live Oak Acquisition Corp. V, LOKV, SPAC, Merger, Acquisition, SME, Small and Medium Enterprises, Fintech, Programmatic Acquisition, Employee Ownership, Private Placement, PIPE, T. Rowe Price, Nasdaq Listing, Earnout, Lock-up, Financial Technology, Corporate Holdco, Business Combination, Growth Strategy, EBITDA, Free Cash Flow, Risk Management, Corporate Governance