Majority Recapitalization

The Experts at Raincatcher are Here to Help

Many of Raincatcher’s Partners and Mergers and acquisitions (M&A) advisors come from backgrounds as middle market consultants, accountants, and investment bankers.

We aim to bring a middle market team and skillset down to the lower middle market to execute recapitalization and M&A, where it has historically been less available.

Raincatcher partners and M&A advisors come from successful careers as investment bankers, Big 4 accountants and consultants and as small business owners.

We provide investment banking services to assist founder and family-owned companies in maximizing their business value and capabilities. If you are looking to raise capital or sell your business, we welcome you to send us a message to get introduced.

What a Majority Recapitalization Can Do For Your Business

Lower middle-market company owners may opt for a majority recapitalization to achieve multiple objectives. This strategic move involves selling a significant portion of their ownership to an investment partner. This investment partner is often a private equity group that focuses on the sector or a strategic buyer such as a supplier or customer. This partial exit enables the business owner to realize some of the value of their company and “take chips off the table.” The infusion of an investment partner, often a private equity firm, brings professional expertise and resources, contributing to organizational professionalization.

Simultaneously, the partnership provides access to additional capital, which is crucial for fueling the company’s growth through strategic initiatives like acquisitions. The additional funds empower the company to expand its market presence, diversify its offerings, and pursue opportunities that contribute to overall competitiveness. By pursuing a majority recap, owners can strike a balance between liquidity, professionalization, and securing the financial means necessary for the company’s expansion.

How an Investment Bank Orchestrates Majority Recapitalization

Majority recapitalizations are ideal for companies with an adjusted EBITDA of $1 million or more as companies much smaller than that are unlikely to be large enough for majority buyers. Additionally, the companies are typically still in a growth phase and led by executives committed to staying involved for several more years. This strategy allows leaders to achieve partial liquidity and bring on a strategic partner to assist in guiding the business, providing both financial flexibility and ongoing involvement from the partner.

 

Companies that opt for a majority recapitalization (recap) often do so because they seek additional capital to fuel expansion and strategic initiatives, making a majority recap a potential fit for companies with ambitious growth plans.

The Raincatcher M&A Process at a Glance

Majority Recapitalization Process and Service

How We Work With Our Majority Recapitalization Clients

Thesis Development

Our clients typically come to us with an array of desired outcomes in mind. Once we are able to get a better understanding of your company and what you’re looking to accomplish, we can give guidance on what you can expect from the market and help guide you on that process.

Companies that are over $3m in adjusted EBITDA may have the option to take on a minority investor. You can learn more about this on our minority recap page.

Specially designed investment banking process

Whether we are working with clients on their buy-side or sell-side M&A, or an equity or debt recapitalization, there are similarities in our approach.

We believe that the through preparation of a data room and investor materials is crucial in achieving the desired outcome and in giving our clients the most offers to look through. 

This process, as well as the caliber of the team executing it is the primary difference between a business broker and an investment bank.

Short-listing prospective partners

Whether we are targetting private equity groups, banks or private money lenders or solely focused on strategic buyers, we tailor a prospect list to each client to make sure that we are getting the business in front of the proper group of debt and equity investors.

Gather bids, negotiate terms and facilitate diligence

Once IOI’s have been received from potential debt and equity investors, we work with our client to short-list the most capable firms and share more information with them ahead of their LOI.

Once they submit an LOI, we negotiate those deals extensively before one is signed and due diligence commences.

Next Steps for Your Majority Recapitalization

In addition to recaps, Raincatcher offers a full suite of other investment banking services, such as M&A.

What Our M&A Clients Have to Say

Request A Consultation

If you’re a business owner and you are currently looking for growth capital, buying out a partner or investor, or taking on an investment partner; we welcome the opportunity to get introduced to discuss our specialized debt and equity recapitalization process and services.