Pursant Case Study – Recapitalization

The Co-Founder of a Wealth Management firm wants to retire, while the other wants to stay. Stalemate? Pursant knows otherwise. A strategy was created to negotiate the deal between the partners and source the capital to fund the transaction.

Two business partners faced a crossroads. Many years ago they together founded a registered investment advisory (RIA) firm that grew to be one of the largest in the U.S. Now, one partner intended to retire. One wished to stay in the business, but lacked enough capital to buy out the other alone. What options did the partners have? Pursant was asked to help them navigate a recapitalization.

Pursant walked the partners through the inevitable questions owners have when faced with such a seemingly unworkable situation, assuring them that there are countless parties from which to source senior and junior debt or equity, and a number of ways to structure a deal for a capital influx that would enable one partner to exit. The team helped explore the advantages and risks of two possible scenarios—sell the business outright or seek a combination of debt and equity to fund the buyout of the partner.

Pursant sourced funding options on behalf of the remaining partner across a broad network, knowing there is an infinite amount of capital trying to find a “home” to earn returns. The Pursant team identified a range of lender and investor options and screened them based on objectives and valuation in order to establish a short list. Pursant led meetings to gauge chemistry, then solicited indications of interest and offers from the parties with the best fit. There were far more choices than the partners ever thought they would have. Ultimately, the founder staying in the business chose a combination of equity and debt to complete the recapitalization: an equity partner that was poised to add considerable strategic value to the firm’s operations while keeping to a long-term investment horizon; plus a debt partner offering more attractive terms than anticipated.