Partial buyouts, S-corporations, and preferred shares

Hi all,

I’m currently looking at a deal where the owner wants to roll a small amount of equity (<20%). I’m planning to finance the deal using SBA 7(a) loans, which, as I understand the partial buyout rules, means this will need to be a stock sale. The company of interest is an s-corp, which means one class of shares and individual investors only.

I’m having trouble getting my head wrapped around how I would bring in investors to help with the equity injection and give them the usual gross equity step up terms in an s-corp: preferred shares that return their principal before common share receive distributions. I assume this varies from deal to deal, but is there a standard practice within the community for self-funded searchers in this situation?

Thanks!