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7 Uses for a Minority Recapitalisation

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In some ways, a minority recapitalisation gives businesses the best of both worlds; providing companies with capital that can be used to meet their growth objectives, while still enabling active shareholders to stay in control.
Infographic showing 7 uses of a minority recap, including recapitalizations, share buybacks, dividends, management buyouts, acquisitions, growth capital and refinancing

The above infographic illustrates the various uses of funds raised from a minority recapitalisation. A minority recapitalisation, also known as a “minority buyout”, is an alternative means of raising capital to generate liquidity. In a minority recapitalisation, leverage in the form of senior debt, mezzanine financing and/or preferred equity can be provided to an existing, positive cash-flow generating business.

Financing from a minority recapitalisation can be used for a variety of capital needs, while allowing the active shareholders to retain majority control of the business, as opposed to a majority recapitalisation or outright sale of the business. The company’s future cash flow is then used to repay indebtedness in subsequent years.

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September 1, 2018

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