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Overview of Minority Recapitalization

An attractive transaction option for business owners who want to continue to maintain control of a growing business There are two types of recapitalization options for business owners—majority and minority. This article will focus on minority recapitalization. What is Minority Recapitalization? In a minority recapitalization, the investor provides debt and equity capital in exchange for 20-49% of the company. A transaction is typically structured with preferred equity that guarantees a return for the investor via a liquidation and dividend preference over common equity. The return can be a combination of cash coupon and deferred interest. The principal will be repaid after the senior debt … [Read more...]

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