In a management buy-out transaction, we finance a group of existing managers to acquire a business from the current ownership group, including transactions where family succession may not be a viable option. J2 arranges and structures the equity and debt necessary for this type of transaction. The management team may be eligible or required to invest alongside our investment for a meaningful ownership stake in the company.
Recapitalization of a Privately Held Company
Successful entrepreneurs may have a concentrated portion of their net worth invested in their business. The transaction would allow business owners with a significant ownership position to ‘take chips off the table’ while retaining ownership in the business. In such a transaction, J2 provides capital to grow the company. A recapitalization provides this partial liquidity event to owners so they may diversify their assets, eliminate personal guaranties, retain their operating role int he business, and partner with the financial partners who can provide the necessary capital and strategic input to grow the company in a rapid and focused manner.
Frequently corporations determine that individual autonomous business units are non-core to their primary business activities and seek to divest these non-core assets. In a corporate divestiture, we work with the selling parent company to facilitate a seamless transition and provide the necessary capital to ensure its independent success.
Some publicly traded companies became so prematurely in order to access public capital markets or provide a vehicle to liquidity for the original ownership group. Periodically the public equity markets may not assign an acceptable value for the equity of some business and the most efficient path to liquidity at an acceptable level is to take the company private. In such a transaction, J2 works in cooperation with the company’s board of directors to acquire the stock of the company facilitating a liquidity event for its shareholders.
Intergenerational Family Transfer
In an intergenerational family transfer, J2 works with a younger generation of a family owned business to acquire the company from the older generation. This structure produces a liquidity event for the older generation and effectively transfers a significant portion of the company ownership to the younger generation in a tax-efficient manner. The resulting company has the benefits of retaining the management, the existing corporate culture, and value systems, while the transaction furthers the family’s estate-planning objectives.
In all cases, transactions are structured so that management retains responsibility for day-to-day operations and has the opportunity to receive significant equity incentive.