Minority 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 Minority Recapitalization Can Do For Your Business

Business owners in the lower middle-market often elect to pursue a minority recapitalization to achieve some liquidity and diversify their wealth while still maintaining control of their company. By taking on an investment partner, the owner can “take some chips off the table,” and partner with a strategic partner, be it a previous competitor, a private equity firm or another industry-focused investor. This partner/investor will most often have a board seat, but not control of the business.

This approach also facilitates professionalizing the organization and getting it ready for a secondary exit by adding the expertise of the investment partner, while simultaneously bringing in additional capital to support growth initiatives, such as acquisitions, without sacrificing majority ownership.

Note that whether your opt to recapitalized your company, or to sell entirely, the acquirer/investor will likely use a mixture of debt and equity to finance the transaction. If you are selling outright, this likely won’t matter to you. However, if you are bringing on an investment partner in a recapitalization, you may have a bias towards one or the other form of financing.

How an Investment Bank Orchestrates Minority Recapitalization

Companies with adjusted EBITDA exceeding $3 million are particularly well-suited for minority recapitalizations. While minority recaps can occasionally be exeuted for companies under this threshold, it is uncommon as the business needs to be large enough to move the needle for investment groups and for them to allocate several million dollars into. Because of this, $3m is typically the cutoff.

Majority and minority recaps are especially common within fragmented industries that are ripe for private equity groups to consolidate. In this scenario, the owner can secure an investment partner to allow them to diversify their wealth, professionalize operations, and fuel growth initiatives. The strategic transaction can not just allow the owners to get some liquidity, it brings operational expertise to the company.

The Raincatcher M&A Process at a Glance

Minority Recapitalization Process and Service

How We Work With Our Minority 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.

You may also benefit from a discussion with one of our team members. Head over to our sell my business page or complete the contact form below.

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 Minority Recapitalization

Not sure if you’re ready to sell majority or minority. Depending on the size of your business, both may be an option.

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.