Recapitalization (partial sale for growth purposes)

A recapitalization makes sense for business owners who wish to continue to run their business after a sale, but desire to cash in on their success by selling a piece of the business to a buyer that can help them continue their growth. Working with a carefully-selected investor group, a business can be sold with the owner reinvesting a proportionately small amount of the proceeds for a meaningful stake in the ownership of the restructured company. Such a transaction allows owners to diversify their net worth, benefiting from the lower tax rates applied to long-term capital gains, while reaping the rewards of the future performance of the company. A sponsored recapitalization is an excellent option for business owners who:

  • Need capital to execute growth plans (e.g., capital needed for acquisitions or new products or facilities)
  • Seek liquidity to diversify net worth while continuing to run business
  • Need capital to purchase stock from minority or inactive investors
  • Seek a partnership with industry veterans to facilitate growth

Business owners may also wish to consider the sale of their company to their management teams through either a recapitalization with the management team sponsored by an outside financial investor or through an Employee Stock Ownership Plan (ESOP). ESOPs have certain, unique tax advantages that can make them an appealing alternative for a business owner. De NES Partners can help assess the feasibility of pursuing such a transaction.

Recapitalizations and Management Buyouts provide shareholders and companies unique opportunities for change while offering a degree of consistency. A properly-structured transaction can provide current liquidity and future capital appreciation, and can give companies the chance to grow in new directions while ensuring that the current management team remains in place. De NES Partners is experienced in all phases of the recapitalization/management buyout process. We have expertise in determining the viability of a transaction, developing the appropriate structure, finding the right private equity sponsor, and negotiating the terms of the management agreement.