Minority Recapitalization Overview
What is a minority recapitalization?
A “recapitalization” shifts the mix of debt, equity, and ownership
A minority recapitalization (minority “recap”) is a type of investment in which NB Group provides debt and equity capital in exchange for a 20-49% ownership stake in a company. Capital can be used for shareholder liquidity and/or growth initiatives.
This type of investment can be an attractive alternative to a majority or full sale of a company because it allows business owners to realize a similar levels of cash proceeds while retaining control of the business.
A minority recap can provide business owners an attractive combination of cash proceeds, ongoing ownership, and control as illustrated in the example below.
In each of these scenarios, we invest both debt and equity, which is used to provide cash to shareholders and to repay existing debt.
In a 49% minority recap, shareholders receive $17.4 million versus $22.0 million in the 80% sale scenario. In other words, shareholders receive only 25% less cash than they do in a 80% sale, but get to retain 51% ownership and control.
When does a minority recap make sense?
These are example scenarios - every situation is different. NBG is highly flexible and works patiently with business owners to design a transaction structure that achieves their goals.
Please contact us for a confidential exploratory discussion about investment options for your business.