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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