KRG prides itself on creatively structuring transactions to meet the needs of the sellers, management, employees, KRG and its affiliated limited partners. We maintain an open mind in evaluating transactions and devise creative solutions to meet the ultimate goals and objectives of all parties. We look to obtain a majority economic interest and Board of Director control in all of our investments. Typically, transactions will be in one or a variation of the following forms
Owner Recapitalization. A recapitalization (commonly referred to as a “recap”) is an ideal alternative for an entrepreneur business owner who wishes to sell a portion of his/her company for liquidity or estate planning purposes, while retaining meaningful equity ownership to participate in the ongoing company’s upside. This structure allows the owner to achieve personal liquidity without sacrificing operating control of the company the owner has painstakingly built, and gains KRG as a strong financial partner to assist with issues of strategic importance. In many cases, an owner’s earning potential on the rolled-over equity (the “second bite of the apple”) is as much or more than the cash received in the initial “partial sale.” In addition, a recapitalization eliminates all personal guarantees tied to the company. KRG will also implement an incentive program to provide management and employees with the opportunity to participate in the equity upside generated by the company’s growth strategy.
Management-led Buyout of a Private Company. Incumbent management will partner with KRG to acquire the business they are currently operating. Sellers typically receive all cash; and management will invest a meaningful portion of their net worth with the remaining capital provided by KRG. We will also implement a compensation incentive program to reward management for profitably growing the business, both internally and through acquisitions.
Management-led Buyout of a Corporate Division. KRG helps managers acquire divisions of parent companies. Corporations selling divisions require that a buyer have both ample funding and a track record of closing transactions quickly and efficiently. As a well-funded, experienced partner with a strong track record, KRG adds financial credibility to managers as they pursue their chance to acquire the division they run. Similar to the other transaction types, KRG will seek to implement equity incentive plans for the management team and employees in the newly acquired company.
Private Equity to Private Equity Sale. Increasingly, more and more privately-held companies are majority owned by private equity groups. KRG has and continues to actively pursue these types of investments and has an outstanding track record of closing on the original terms and conditions in a balanced and efficient manner. KRG works closely with ongoing management and strives to be the “partner of choice” during these processes through a combination of how we conduct our diligence, our style of negotiation and the types of incentive equity programs we implement to ensure alignment of interest with KRG.
Family Succession. Often this type of transaction involves backing certain members of family management to buy out from the senior generation or outside shareholders. By working with KRG in a family succession transaction, active family operators secure operating control and significant equity ownership while gaining KRG as a strong financial partner in pursuing future growth opportunities. In addition, selling shareholders achieve liquidity to meet personal estate planning and net worth diversification objectives.. KRG is well aware of the importance of discretion and confidentiality in this type of transaction.
Outright Purchase. While similar to a management buyout, KRG acquires 100% ownership of the company from a departing owner. In this case, KRG will seek to incentivize the management team and employees through a stock purchase plan, stock option/incentive or loan to acquire equity on a pari passu basis with KRG.
Public to Private. KRG will work with key shareholders and management of small cap public companies that are looking to more effectively expand and grow their operations without the burden and visibility of a publicly-traded organization.