Options – Sell, Merge, Recapitalize?
At Baker Group M&A Consultants, Inc. we listen to our business owner’s (client) objectives and find the right buyer for them. There are a number of strategies and deal structures for owners. With careful discussion and working together we find the right transaction for them!
An outright purchase is the process wherein the stock or assets of a corporation are acquired by a purchaser. The transaction may take the form of a stock purchase or an asset purchase. The buyer would acquire 100% ownership of the company from a departing owner.
The acquired company transfers the assets of the business to the purchaser. These could include equipment, inventory and real estate, as well as intangible assets such as contract rights, leases, copyrights, patents, trademarks, etc. The acquired company executes the specific types of documents necessary to transfer the assets, such as deeds, bills of sale, and assignments. This type of transaction generally contains tax attributes.
The seller transfers the shares in the acquired corporation to the purchaser in exchange for an agreed-upon payment. A stock transaction is appropriate when tax costs, risk considerations or other issues surrounding an asset transaction make a stock sale more appealing to the parties.
A recapitalization (commonly referred to as a “recap”) is an ideal alternative for an entrepreneur business owner who wishes to sell a portion of his/her company for liquidity or estate planning purposes, while retaining significant equity ownership to participate in the ongoing company’s upside. This structure allows the owner to achieve personal liquidity without sacrificing operating control of the company that the owner has painstakingly grown, while gaining a strong financial partner to assist with issues of strategic importance. In many cases, an owner’s earning potential on the rolled-over equity is as much or more than the amount received in the initial “partial sale”. In addition, a recapitalization eliminates all personal guarantees tied to the company. The financial partner or equity investor will also implement an incentive program to provide management and employees with the opportunity to participate in the equity upside generated by the company’s growth strategy.
Contact Regional Associate, Jon Giberson today at 714-345-0714
for a consultation to discuss the value of your business.