Here’s an interesting spot many of our clients find themselves in… They have spent 20 or 30 years building their businesses. They have plenty of years left to work, and they still have plenty of drive, energy, and enthusiasm for their Companies. But the overwhelming majority of their personal net worth is tied up in their Companies. Not to mention that they personally guarantee the debts of the Company and personally fund the continued expansion and growth initiatives of the Company.
If this sounds like you, you may be well-positioned for a recapitalization transaction. A recapitalization normally involves the selling of a majority of your Company in order to monetize a portion of your investment in the Company and relieve you of personal financial liabilities for the Company, while retaining ownership and continuing to serve in the lead executive role.
Recapitalization transactions involving the sale of 60% to 80% of a Company are common, and acquirers appreciate the continued commitment of the owner(s) who built the business over the course of so many years. It’s the proverbial “skin in the game.” The acquirer makes a sound investment in your Company and supports the continued growth of the Company, with the confidence that you are still involved and contributing your knowledge, experience and relationships to the endeavor.
By retaining a meaningful minority ownership position in the Company, you benefit from the continued growth of the Company and eventually cash out, again, when the Company is sold ideally at a higher value some years down the road. All the while, you have secured your financial future and diversified your personal risk by selling a substantial portion of the Company.
If you have reached the point that a significant liquidity event and reduction of personal risk are priorities for you, but you would like to remain involved in the leadership of the Company you have built, CRI Capital Advisors can help you identify the right financial/strategic partner and assist you in executing a recapitalization transaction.