Private Equity Recapitalizations

​A Private Equity recapitalization is where the owner(s) sells only a portion of the business and remains in a senior executive role to help the Private Equity firm operate and grow the business through its next phase.  The seller receives a portion of the value of the business in cash (i.e. essentially, “takes chips off the table”) and reduces their ownership risk, but maintains upside appreciation potential over the longer-term through their "rolled equity".  It usually involves setting up a new capital structure of the business with senior lenders and/or junior lenders along with other sources of capital from PE Partners, co-investors, etc.

The retention of equity in the business by the seller demonstrates confidence in its future potential and lowers operational risk for the PE firm, allowing them to pay higher values than would otherwise be possible.

Overview on How the Private Equity Industry Works

• How the PE Companies Operate
• Types of Deals
• Financial engineering vs operational improvement
• Key criteria for an LBO
• Buy and build strategies
• What to look for in a PE firm
• PE business expertise
• Valuations and conclusions

Curious to learn if your business is well-suited for a PE recap, take our questionnaire here.

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