Skip to content
Laurent CapitalMergers & Acquisitions

Recapitalizations & Partial Sales

We advise owners who want to take meaningful liquidity, bring in an institutional partner or fund growth without selling the entire company. We run the process, compare partners on terms that matter over a full holding period and help negotiate the governance and rollover arrangements that follow.

When to engage us

  • You want to convert part of your ownership into cash while continuing to lead the company and share in its future growth.
  • The business has growth opportunities, such as acquisitions or new markets, that require more capital than it can generate internally.
  • A co-founder or minority shareholder wants to exit and the remaining owners need a partner to fund the buyout.
  • Most of your personal wealth is tied to one company and you want to reduce that concentration without giving up control entirely.
  • You expect the company to be worth considerably more in several years and want an experienced partner to help get there before a final sale.

How we run it

How we approach a partial sale

A recapitalization begins a relationship rather than ending one. The owner who sells a majority stake to a private equity firm and rolls the remainder is entering a partnership that will last several years and conclude in a second transaction. The terms that govern that partnership matter as much as the price paid today.

For that reason we evaluate partners on more than valuation. We look at how each firm has behaved in difficult periods, how it works with founders who remain in leadership, what it expects in leverage and how it has approached past exits. We encourage owners to speak with leaders of companies each prospective partner has backed.

Majority and minority structures

In a majority recapitalization, the investor acquires control and the owner retains a significant minority, often between ten and forty percent. Liquidity at closing is substantial, and the retained stake participates in the future sale. In a minority transaction, the owner keeps control and the investor receives protective rights in exchange for capital. Minority capital is generally priced to reflect those protections, and the governance terms deserve careful attention.

  • Majority recapitalizations suit owners prepared to share control in exchange for liquidity and an experienced partner.
  • Minority and growth equity suit companies with a clear use for capital and owners who intend to remain in charge.
  • Partial sales to family offices may offer longer horizons and less leverage, at a different valuation.

Rollover equity

Rolled equity is frequently the most consequential and least examined part of a recapitalization. Its value depends on the debt placed on the company, the preferences held by the investor and the terms of any management incentive plan. We model these effects explicitly so that owners understand what the second sale is likely to deliver under different outcomes, not only under the investor’s plan.

We advise on the transaction and run the process. Investment decisions, financing commitments and securities matters remain with the investors and your legal counsel.

What we deliver

Alternatives analysis

A comparison of the realistic paths: majority recapitalization, minority investment, growth equity, a dividend recapitalization or a full sale, with the liquidity, control and risk each implies.

Partner universe

A selected list of private equity firms, growth investors, family offices and independent sponsors whose strategy, hold period and reputation suit the company and its owners.

Investor materials

A confidential information memorandum and financial model presenting the company’s performance and growth plan in the form institutional investors expect.

Rollover equity analysis

An assessment of how rolled equity is likely to perform under different outcomes, including its position in the capital structure and its treatment at a future exit.

Term comparison

A side-by-side review of proposals covering valuation, leverage, board composition, consent rights, preferences, management incentives, and drag-along and tag-along provisions.

Process management and closing

Coordination of diligence, negotiation of the letter of intent and support through definitive documentation with your legal, tax and accounting advisors.

Timeline

  1. 1

    Objectives and structure

    Weeks 1–3

    We establish what each shareholder wants in liquidity, control and involvement, and test those goals against what the market is likely to support. This often narrows the field to one or two structures.

  2. 2

    Preparation

    Weeks 3–8

    We prepare normalized financials, the growth plan and investor materials, and select the partners to approach.

  3. 3

    Partner outreach and first proposals

    Weeks 8–14

    Investors review the opportunity under confidentiality and submit initial proposals. We clarify differences in structure so proposals can be compared on like terms.

  4. 4

    Meetings and term negotiation

    Weeks 14–20

    Shortlisted partners meet the leadership team. We negotiate economics and governance in parallel, since the two are closely linked in a partial sale.

  5. 5

    Diligence and close

    Weeks 20–32

    The selected partner completes diligence while counsel documents the transaction, including the shareholders’ agreement that will govern the relationship afterward.

Frequently asked questions

How much of the company do I need to sell?

There is no fixed answer. Minority investments are commonly in the range of twenty to forty-nine percent; majority recapitalizations typically leave the owner with a meaningful retained stake. The right level depends on your liquidity needs and how much control you wish to keep.

Will I still run the company?

In most recapitalizations the owner continues to lead the business, at least for a period. Your role, reporting lines and decision rights are negotiated and set out in the transaction documents.

What happens to my rolled equity at the next sale?

Rolled equity is typically sold alongside the investor’s stake when the company is sold again. Its value at that point depends on the company’s performance, the debt it carries and the preferences in the capital structure, which is why we model those terms before you commit.

Is a recapitalization better than a full sale?

It depends on your objectives. A recapitalization offers a share of future growth at the cost of continued risk and shared control. We generally test both paths before recommending one.

Related insights

Considering a sale, an acquisition or a recapitalization?

Conversations with Laurent Capital are confidential and carry no obligation. A senior member of the firm responds to every inquiry within one business day.

Start a confidential conversation

(650) 999-9845|info@laurent.capital