08 Nov 2022
Achieving Liquidity a Pain in the Asset? Consider a Single Asset Recapitalization
There has been a recent and notable uptick in single asset recapitalizations—transactions in which a fund sells its interest in a portfolio investment to another entity controlled by the same sponsor. These transactions are valuable tools for sponsors looking for ways to provide liquidity to existing investors without fully divesting from a portfolio company they like. This practice note contains a brief explanation of what these deals are, and why a sponsor and its fund investors may want to pursue a single asset recap. It discusses typical structures for these deals, certain considerations sponsors will want to keep in mind, strategies to reduce deal execution risk, and key tax considerations.
Related Content
- Exit Strategies in Private Equity Investments
Review available exit strategies in private equity investments, including selling portfolio companies, exiting via an initial public offering, and leveraged recapitalizations. - Stapled Secondary Private Equity Fund Restructurings
Read this explanation of how new investors purchase interests of existing fund investors in secondary private equity fund transactions and “staple on” an obligation to make capital contributions into a new fund: a stapled secondary restructuring. - Multi-Process Exit Transactions: Overview and Management
Consult this practice note for an explanation of why fund sponsors would want to pursue multiple exit strategies at once, and how doing so creates value for investors.
Practical Guidance Updates
Featuring the latest updates from your Practical Guidance account.
- Document alerts allow you to stay current on legal developments that affect your practice.
Find out how to set up your document alerts. - Ukraine Invasion Resource Kit
- The Practical Guidance Journal Spring 2021 Edition
COVID-19 Vaccination: Key Employment Issues - The Practical Guidance Journal Fall Edition features impacts of the Dobbs v. Jackson Health Organization decision on employers, healthcare, insurance, and privacy concerns, and tracks the status of state law changes.
Experience results today with practical guidance, legal research, and data-driven insights—all in one place.
Experience Lexis+