The Power of Recapitalization – What It Can Do for Your Business

A common misconception amongst business owners struggling to make ends meet is that they must give up their company completely in order to overcome the problem. While this may in fact be the case for some business owners, those who have a sound business strategy can remain in control of their business ventures when hard times arise.

One strategy when facing financial difficulties is recapitalization. Recapitalization is the process of selling equity in your company to outside investors in order to create a more stable capital structure. In essence, the company exchanges one form of financing for another.

What can recapitalization do for your business? You might be surprised. The three potential outcomes listed below may make you consider restructuring your company’s debt and equity mixture.

Grow the company

With the extra money provided by financial partners, smaller businesses can use the process of recapitalization to invest in workforce expansion, increase inventory, or expand real estate. Larger companies may use the move to acquire competitors or to increase equity value for shareholders.

Enter new markets

Recapitalization may also bring in enough extra income to allow your business to expand beyond its current market. With the help of your capital provider, you can brainstorm ways to develop new products and services for future benefit.

New voices, new strategies

Selling equity isn’t all about the financial stability it can provide. While that’s often a driving factor, you should also consider the benefits of having additional insight from new partners. After all, the power of groupthink is sometimes much greater than that of an individual’s thoughts.

If you’re looking for liquidity but aren’t ready to sell your company or relinquish control, recapitalization may be right for you. Our team of experts can help you decide if recapitalization would be beneficial for your business! Contact us to learn more.