Inc. staff

Recap Renaissance

Thanks to heated competition in the private equity market, now may be the ideal time to recapitalize.

 

  • How it works:
    Private equity firms buy stakes in companies, allowing business owners to buy out a partner, reinvest in the company, or pocket the cash.

  • Time frame:
    Deals typically close in three to 12 months, during which time businesses create proposals and vet bids.

  • The price tag:
    Legal and accounting fees start at 1 percent of the deal amount and increase according to complexity.

  • The bottom line:
    Most private equity firms expect annual returns of 20 to 35 percent and plan to exit in three to seven years, usually through a sale.