When you need to recalibrate your business to achieve your goals, recapitalization is often the answer. Think of recapitalization like a rearrangement or a reorganization of your company’s debts and assets. You can stabilize your company by replacing one type of financing with another.
Pull wealth out of your privately held business.
Maintain a proper balance sheet structure.
Create distributions to owners and shareholders.
Bring on new shareholders.
Buy out other shareholders.
With recapitalization, you can liquefy most of your equity without losing control of your business. As an entrepreneur, you’re likely emotionally and financially attached to your business. Selling it is the last thing that you want to do. If you recapitalize, you will maintain control of your business, but there will be less personal risk involved. This makes it an ideal option for business owners who are in a tight spot (like a possible bankruptcy), but don’t want to sell their company.
Recapitalization is also a viable option for businesses that are growing quickly and need an infusion of funds to manage the growth. You can take your business to the next level by bringing on new shareholders without sacrificing ownership. New shareholders can also breathe new life into a venture, helping you to map out your company’s growth strategically and efficiently.
Some business owners use recapitalization as a way to pay for retirement. This is a great option for family owned businesses. You may not be willing to relinquish the reins just yet, but you also don’t want to manage the day to day operations of your family’s company.
Recapitalization is smart option for many business owners. Please contact us to find out if it is the right decision for you and your company.