The consideration to sell all or part of a business is likely one of the largest, most personally impactful financial decisions your shareholders will make. There are several strategies to consider, so it Growing companies often consume more cash than is available. One opportunity business owners have is to secure growth capital from non-traditional sources. Affinity Ventures has years of experience helping guide business owners as they consider and implement these strategies. Some of the most effective of these include:

a) Recapitalization

  1. Replacing some of the capital classes with new investors
  2. This can be debt, equity or a combination
  3. Majority or minority; most prefer a majority recap to remove personal guarantees

b) Mezzanine Lending

  1. This form of lending “acts” like an equity holder in terms of patience
  2. The cost is generally higher than traditional lending, but less expensive than equity
  3. Generally a Mezz lender looks for a lead investor in the transaction

c) Equity Investment

  1. Straight equity is expensive
  2. Some control is generally required by the investor
  3. Can complicate a final exit due to multiple investors

d) Factoring

  1. This concept essentially involves “selling” contracts or A/R at a discount
  2. Can be very expensive
  3. Often an acceptable last resort, but can reduce the need for equity