Recapitalization is a process that allows a business owner to convert some of the equity in the business to cash while continuing to maintain an ownership position.
Some private equity groups and private investors actively invest in privately held companies. They generally seek to partner with some or all of the existing management team. These investors typically purchase more than 51% to secure control, but there are firms who focus on purchases of minority positions. The owner is able to take some cash out of the business and retain ownership and decision-making ability going forward. Private equity firms typically seek to grow the company over a three to five year period and then exit.
Key benefits of a private equity recapitalization include funding expansion of the business, diversifying investments in areas outside the business, removal of personal guarantees, peace of mind, or diversification - “taking some chips off the table.”
Elite facilitates recapitalizations by working with the business owner to identify goals, identify the proper strategic partner, negotiate the agreement, maximize the take home and in general manage the entire process.
We can help you find out if private equity is the right option for your business and negotiate the pitfalls in dealing with private equity buyers.