Choose a partial exit path

Who this is for

Founder led lower-middle market companies with 5 to 50 million in annual revenue that want to take chips off the table while keeping growth in sight.

The quick answer

Common paths include a minority equity sale, a majority recap with a private equity partner, a management buyout, or a sale of a division. Pick the option that fits your goals for cash, control, and future growth. Model tax, governance, and earn out terms before you choose.

The method in eight steps

Write your goals
How much cash now, how much control you want to keep, and what growth you want to fund over the next three years.
Shortlist the paths
Minority sale for growth capital with shared control. Majority recap for significant liquidity with a partner who drives next steps. Management buyout when a capable team can finance the purchase. Divisional sale when one asset no longer fits the core.
Model value and tax
Build a simple view of proceeds before and after tax for each option. Include transaction costs and any escrow or earn out.
Define governance and decision rights
For each option write who appoints directors, what matters need approval, and how budgets and compensation are set.
Test partner fit
For paths that bring in a partner, meet operating partners and portfolio CEOs. Ask for stage proof and for examples of help beyond capital.
Check debt capacity and covenants
For recaps and buyouts, confirm lending appetite, headroom, and monthly reporting expectations.
Plan the timeline
Work back from a target close. Add time for banker selection, buyer outreach, offers, diligence, and legal.
Prepare communications
Draft how you will brief managers, staff, customers, and suppliers. Clear messages protect momentum.

Example

A founder chose a majority recap that created personal liquidity and funded a plant upgrade. A simple board charter and clear budget rules kept decisions fast.

Pitfalls and fixes

Optimising for headline price only. Compare cash after tax and control terms.
Rushing partner selection. Check stage fit and references.
Leaving staff out. Prepare a clear internal story.

Checklist

Goals for cash, control, growth
Option models before and after tax
Governance rules by option
Debt headroom view
Timeline and communications plan