Expert Private Equity Funding & Recapitalizaton

Private equity funding/recapitalization is ideal for private or family-owned companies that have experienced management teams, stable cash flows and healthy margins, and attractive growth opportunities in strong markets. In essence, it creates liquidity and risk diversification today while setting the stage for a second “payday” down the road.

Recapitalization through ICG can provide the necessary capital for growth – or personal liquidity – all while allowing the current owner to maintain a significant ownership stake.

Advantages

  • Liquidity. Business owners can realize significant personal and/or family liquidity by selling part of the business and extracting 60% to 80% or more of their company’s current value while retaining a disproportionate share of the remaining equity.
  • Diversification. Avoids the risks of having personal/family wealth tied to a single business enterprise – allows for prudent diversification of wealth.
  • Upside. Entrepreneurs can participate in a “second bite of the apple” in three to five years by maintaining a meaningful ownership stake (20% to 40% or more) and, by aggressively growing the business, create significant additional wealth.
  • Management. Owners and existing management maintain operational control of the business and, with new capital partners, can focus on accelerated growth. An employee stock option program can broaden the equity participation to other tiers of management.
  • Strong Growth Potential. A well-capitalized partner with deep pockets and extensive business connections sets the stage for strong growth organically and/or through acquisitions.

Private equity funding/recapitalization represents an alternative to a complete sale, and ICG is a leader in creatively structuring these complex transactions.

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Let us show you how to capitalize on the enormous amount of sweat equity you’ve put into your business over the years.

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Recapitalization Versus Complete Sale: A Head-to-Head Comparison

Issue

Valuation

Recapitalization

Full, fair values are achieved where lending market conditions provide an upper bound on value.

Complete Sale

Higher values can be achieved with the expectation of realizing revenue and/or expense “synergies.”

Ownership Interest

Sell 50% to 90% of the ownership and “roll-over” a retained equity inter-
est typically on a tax-deferred basis; provide second tier management with equity through a stock option plan.

Sell 100% of the ownership of the company, with limited chance for future equity participation.

Management’s Role

Management will retain operational control of the company; financial owners typically act as advisors at the board level.

Nominal transition period of usually 6 to 18 months.

Capital for Growth

Private equity groups are committed to investing capital and are deter- mined to pursue aggressive growth initiatives.

Willingness to invest growth capital varies based on corporate strategy and resources.

Employees

Management remains in control of personnel decisions, as well as, other day-to-day operational decisions.

Redundant employees are eliminated as part of the “synergies” between companies.

Corporate Image

Corporate name and image continues and the brand/franchise value is built.

Seller’s corporate identity is eliminated, unless significant “brand equity” exists.

Which option will work best for you?

Contact us today to request a free confidential consultation.

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