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7 Uses for a Minority Recapitalization
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In some ways, a minority recapitalization gives businesses the best of both worlds; providing companies with capital that can be used to meet their growth objectives, while still enabling active shareholders to stay in control.
![Infographic showing 7 uses of a minority recap, including recapitalizations, share buybacks, dividends, management buyouts, acquisitions, growth capital and refinancing](https://cdn.prod.website-files.com/6100514a3816cbf51fdaa3f0/6100514a3816cb5600daa92e_7Uses.jpg)
The above infographic illustrates the various uses of funds raised from a minority recapitalization. A minority recapitalization, also known as a “minority buyout”, is an alternative means of raising capital to generate liquidity. In a minority recapitalization, leverage in the form of senior debt, mezzanine financing and/or preferred equity can be provided to an existing, positive cash-flow generating business.
Financing from a minority recapitalization can be used for a variety of capital needs, while allowing the active shareholders to retain majority control of the business, as opposed to a majority recapitalization or outright sale of the business. The company’s future cash flow is then used to repay indebtedness in subsequent years.
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September 1, 2018
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