During the heyday of Mergers and Acquisitions activity (2003-2006), recapitalizing a privately held business was a popular transaction structure. Today it is making a comeback through a structure known as an Equity Recapitalization or Equity Recap for short.

An Equity Recap is a financial transaction that provides existing shareholders with liquidity while eliminating personal liabilities or guarantees without losing operational control. In a nutshell, an Equity Recap is a “restructuring” of the company’s balance sheet. In most cases, a Private Equity Group will partner with the business owner to restructure the balance sheet with a combination of equity and debt. The existing shareholders convert 60% to 90% of their equity into cash and the Private Equity Group will acquire the outstanding shares of the company. As a result, the owner maintains some equity in the company and they or their family members continue to operate the business post transaction.

Next Part 2 – David

Today, we are launching our new website that includes this forum where we will provide commentary & information on middle market M&A, views from our team on deal making and highlight company news. This blog will rely on the expertise of our principals, professionals and our integrated network of specialist. In addition to mergers & acquisitions information, we will include features and commentary on topics such as transactional law, immigration law, private equity, entrepreneurship, corporate finance, deal structure and complex negotiations.

At Transact Partners, our client driven, success fee philosophy is different than most in our industry. As a result, we often view issues that influence middle market family owned & privately held companies from a different perspective than others. Please visit frequently and share with others that may have an interest.

Thank you,

David Boykin
Co-Founder/Principal