Recapitalization refers to changing a company's debt and equity structure.  It is done for various reasons and in various ways.

In conjunction with a private equity investor, it can be a powerful tool for helping company owners realize some immediate liquidity on their investment, reduce personal financial risk, defer tax gain, establish a personal exit plan over coming years, obtain capital to stabilize and/or grow the company, then realize a second liquidity event in subsequent years.

The table below illustrates only two possible change of ownership scenarios.  To accomplish such scenarios, we may match your company with an investment group that specializes in recapitalizing private companies, and with active investment experience and/or interest in your industry.

Typically, these investors will want owners and/or key management to remain and operate the company, and will provide management additional advisory, talent and financial resources to grow the company.

	Management Buy Out Scenario	Additional Capital Scenario
Situation	Existing management team members want to buy out company founders (the seller) Existing management team members (the acquirer) would like to obtain capital for growth initiatives Founders will consider either cashing out partially, then phasing out of the business over time, or just exiting the business altogether	Company owners need capital for turnaround, growth or acquisition(s) Owners want to stay with the company and grow it Owners may be considering retirement or doing something else in a handful of years, but aren't ready yet
Structure	Investment firm and existing management each contribute cash for equity to Founders Together, they become majority owners in the company Selling founders may finance a percentage of the sale Management and investing company secure debt financing for remainder of acquisition price, plus financing for growth Remainder of Founders' interest is transferred to new owners over time Founders remain involved as paid consultants for a period	Investment firm buys company from owners (sellers) Sellers buy back minority share of equity Investment firm and  sellers now own company together as equity partners They secure debt financing for remainder of acquisition price Sellers/Equity partners remain in place to grow the company, with additional financial and advisory resources of investor group Company is sold in a handful of years, all equity partners share in greater gains of larger, higher valued company
Outcome	Selling owners received capital infusion from sale Selling owners had option of exiting completely or partly Selling owners felt good about leaving company in hands of trusted managers Buying managers had solid financial and advisory partners resources to help them succeed Selling owners remained as consultants for a time to ensure smooth transition	Original owners (sellers) received capital infusion from sale Original owners reduced risk by diversifying personal assets Owners no longer personal guarantors for company Original owners continued to run the company Investment supported company growth and acquisition opportunities Original owners received 2nd capital infusion from sale of larger, more valuable company

If either of these scenarios seem remotely applicable to your company needs, please contact us to discuss this.