A recapitalization or Phased Liquidity Transaction is commonly
used when a business owner who is actively involved in the
operations of the company would like to generate liquidity
without completely exiting the business. Our Phased Liquidity
Transaction allows shareholders to convert a portion of their
equity into cash to diversify investment holdings and lower
their risk profile, all while maintaining operational control
and a significant ongoing equity stake. After the transaction
is consummated, typically with a private equity group or institutional
investor, the company also has a partner with additional capital
to assist in funding future growth and a board member with
new industry contacts and strategic insights. A Phased Liquidity
Transaction offers a viable alternative to the rigors, expense
and regulatory scrutiny of taking a company public.
The Phased Liquidity
Transaction offers many benefits to business owners:
Lower the percentage of their
net worth tied up in the company and eliminate all personal
guarantees of company liabilities.
Convert up to 90% of equity to
cash, while maintaining a 20% to 25% ownership interest.
The business owner continues to
operate the company while participating in its growth. As
the new equity partners in the company typically plan for
an exit in five to seven years, the owner can expect another
significant payday.
Provides the opportunity to allow
key employees to become shareholders.
The capital providers in the Phased
Liquidity Transaction also have additional funding sources
to grow the business. This allows the owner to quickly respond
to opportunities in the industry.
Participating as your advisor, we utilize
our extensive industry and financial contacts in combination
with our proprietary knowledge base to ensure you find the best
combination of private equity and mezzanine and asset lenders.
We then help you structure and negotiate the best transaction
for you.
