The owner wants to get out of personally-guaranteed borrowings

The owner wants to get out of personally-guaranteed borrowings because they need capital to grow the business.

The owner can take some chips off the table now and get a second chance at the apple in the future with a recapitalization. Owner-managed and family-owned businesses’ principals must be aware that ownership control does not have to be given up during a recapitalization.

Obviously, this is the method that is used the most, but minority investment recapitalizations in which the current owners keep control are also a very good option. The key is to locate and collaborate with an organization that is able to structure the transaction in accordance with the owner’s preferences.

Reasons why a recapitalization might be worthwhile: The owner wants to reduce, but not eliminate, the amount of time spent managing the business. The owner would like a son or daughter to run the business. The owner wants to spread out risk and assets and “cash out” some of it for retirement or estate planning. A manager or key employee is ready to take over the company, but the owner needs money to pay them.

During a recapitalization, Private Equity Groups can be extremely useful business partners who contribute more than just capital. Additionally, they bring a wide range of resources and expertise to the company, which is essential for taking it to the next level.

Some of these advantages are as follows: a group of knowledgeable third-party directors and managers who can serve as a sounding board and fill in for needed personnel gaps or add new ideas and perspectives to resources already in place. Knowledge of strategic planning, including assistance with deal flow and future acquisitions.

expertise in managing financial statements that makes it possible to use tax-saving tools like: asset tax treatment, accelerated depreciation, and write-offs The ability to carry out an effective and quick exit so that the owner can take a second bite of the apple.

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