Recapitalizations  

The recapitalization of a company allows owners to achieve personal liquidity without sacrificing the operating control of the company they painstakingly built. Through a recapitalization, a portion of an owner’s equity is sold (either a minority or a majority interest), while maintaining operating and ownership control, if desired.

A recapitalization is an alternative to a total sale or the regulatory scrutiny of a public offering. An owner gains a financial partner to assist with strategic issues without interference in day-to-day operations. The financial partner, with its access to substantial financial resources, assists the company in expansion plans or making strategic acquisitions. This newfound ability to grow increases the value of the owner’s retained equity position.

A recapitalization is an excellent option to facilitate the owner’s estate planning and execute a succession plan to either the next generation or management. By selling a portion of the company, the owners eliminate personal guarantees on company debt, diversify net worth, and continue to run the company, if they choose.