A private equity recapitalization allows a business owner to “take some chips off the table” by selling part of the company while maintaining a continued ownership position. The private equity group seeks to partner with some or all of the existing management team.
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, and peace of mind.