Recapitalization involves the restructuring of a company’s debt and equity mixture.
Often recapitalization will involve giving up share capital for funding and can include the exchange of one form of financing or another.
Business owners often want to alter their debt-to-equity ratio to improve liquidity or risk. This can be done for multiple reasons including an exit strategy as well as a growth strategy.
In this arena, Private Equity Recapitalization is our focus where such is a financial acquisition technique used primarily by private equity groups, where business owners sell a portion of their business, while retaining some equity to take advantage of future growth of the company. This gives the business owners or sellers some liquidity and the potential to crystallize the value of their retained equity for a second bite at the apple when the company is sold again by the private equity group.
Recapitalizations are commonly used to fund the expansion or growth of the business or at times to pay down bank debt. In most recapitalizations, the seller remains on to drive the company and business.
If Recapitalization is something you would like to consider or learn more about, please contact the professionals at Pacific M&A and Business Brokers Ltd. for a free and no obligation confidential consultation.