Deal structure
A minority recapitalization is a deal where an investor buys less than half of a company, so the owner keeps control and takes some cash out.
In a minority recapitalization, the investor buys a stake smaller than 50%. You keep control of decisions and still get some cash or growth funding.
For example, an investor pays $6 million for 20% of a company valued at $30 million. The owner receives cash, keeps 80% and keeps control of the board.
This can suit owners who are not ready to step back. The trade-offs are that investors often want more protections for the smaller stake, and fewer firms do minority deals in the lower middle market. The size of the cash-out is smaller too.
Think about your goals. If you want a full partner and a larger payout, a majority recapitalization may fit better. If you want to keep control, look at minority options and growth equity.
Capstreet states its focus as "Primarily majority investments". Compare both paths in majority vs minority recapitalization.
Related terms
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