Recapitalization Transactions (Majority or Minority) – These transactions involve a business owner’s achieving a significant cash liquidity event but also retaining a meaningful residual equity interest in the business going forward (typically ranging from 10% to 70%). Recapitalization transactions typically involve a private equity group buyer.  

In a majority recapitalization, the business owner sells more than 50% of his / her ownership interest in the business to a private equity group. A majority recapitalization delivers the most cash liquidity but also results in the private equity group’s becoming the control shareholder post transaction.  

In a minority recapitalization transaction, the business owner sells less than 50% of his / her ownership interest in the business to a private equity group. A minority recapitalization delivers less cash liquidity but results in the business owner’s maintaining a control ownership position post transaction.  

Private equity groups have been very aggressive in terms of valuations in recent years as they seek to deploy large sums of investment capital under management. Recapitalization transactions typically involve an ongoing role for the existing management leadership of the recapitalized company.