Buy Out a Partner or Shareholder

Recapitalizations

If you are looking to buy out a minority shareholder, pay off debt, diversify your own assets by taking “some chips off the table”, or simply complete some proactive estate planning, DCA can provide you with the required capital to achieve your objectives. Having completed recapitalizations of up to $54 million, our recapitalizations can be either leveraged (using bank debt) or unleveraged in nature, and can be both control (over 50% ownership) or minority (less than 50%) investments. Recapitalization transactions may also include a portion of the proceeds to be used as growth capital.

 
Our typical investment profile:

 

Industry: Generalist, across business services; light manufacturing and distribution; healthcare; retail and consumer products; media and publishing; information technology; construction services; sustainable technology and services; and food/beverage/agri-business.
 

Geography: Underserved communities in California and adjacent states
 

Company Profile: Minimum of $10 million in revenues and profitable: (i) outstanding, proven and mature management teams; (ii) large, growing market opportunities; (iii) differentiated solutions with sustainable competitive advantages; (iv) scalable business models which are either profitable at the time of investment or have a clear, near-term path to profitability; (v) a clear path to liquidity in a five year timeframe; (vi) interests which are well-aligned between management and the Fund; and (vii) the ability for the General Partner and its General Partner Advisory Board to add significant value over the lifecycle of the investment.
 

Use of Capital: Leveraged or unleveraged recapitalization of a company to either: i) restructure the Company’s existing balance sheet and capital structure, ii) provide liquidity to, or buyout of, an existing shareholder, iii) to allow current management and ownership to take cash out of the business, diversify their risk, and bring on a Partner to help maximize the value of the Company.
 

Investment Size: Generally $2-6 million, with capacity up to $30-50 million through our affiliated fund partners.
 

Investment Life: 3-5 years
 

Management: Experienced, talented, passionate, honest and committed
Investment Structure: DCA typically invests through a Preferred Equity instrument, and does not typically require any interest or dividend payments.
 

Investment Structure: DCA typically invests through a Preferred Equity instrument, and does not typically require any interest or dividend payments.
 

Management Control: In growth capital investments, DCA is most typically a minority (less than 50%) investor, allowing management to retain a controlling (greater than 50%) interest in the Company. By partnering with DCA, management teams can diversify their risk, expand their financial and intellectual resources, accelerate their growth trajectory, and partner with a firm with strong expertise in maximizing the value of the Company, and facilitating successful exits.
 

Minority Investment Opportunity: Given the geographic region we cover, we also look pro-actively for opportunities to invest in minority-owned or minority-targeted enterprises, particularly those serving the rapidly expanding Hispanic community.

 

 

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