It is important for business owners to consider all available opportunities when envisioning long term goals. This is important because they have a lot of wealth tied up in their companies. For instance, when in need of liquidity, many business owners prefer recapitalization. It is a powerful tools of corporate finance, allowing them to reduce the amount of wealth at stake by selling a portion of their company to a private equity firm or an outside investment firm.
Through recapitalization, capital infusion happens, again allowing the business owners to diversify their holdings without having to lose control over the company. There are several ways in which outside capital can benefit a company; however, the benefits will majorly depend on the goals of the owners and the company’s development stage.
If you are a business owner and you are opting for recapitalization, it will provide your business with the much needed capital for various plans such as, diversifying personal portfolio, growing the company, expanding business in new markets and so on.
Here are top three reasons why recapitalization can prove beneficial for your business:
- Even if everyone has been pushing you to retire because you have been working at your business for decades, you don’t necessarily have to. You can take some stress off by choosing to recapitalize the business. You will reduce your involvement to a great extend but also stay in control.
- This is a great move if you don’t want the company culture to change which usually happens in a buyout.
- Third benefit is that you can get the required liquidity to seize various opportunities available in the market.
Whether it is recapitalization or business acquisition, it is recommended to hire experts who will give you the best advice.
