# Recapitalization (recap)

A change in who owns the equity, short of the company changing hands.

It is the most common way a [private-equity](https://searchspheresource.com/glossary/private-equity) purchase of a founder-run business gets announced, and the word is doing real work. A majority recap sells control while the owner keeps a slice, and a minority recap takes cash off the table and leaves the owner in charge. For a [searcher](https://searchspheresource.com/glossary/searcher) reading exit news, the distinction decides whether the operator actually sold. For an owner reading a [term sheet](https://searchspheresource.com/glossary/term-sheet), it decides whether the second sale is the one that matters, since the stake you keep is priced by the buyer's exit on the buyer's timing.

In numbers: In a majority recap at a 6x multiple on $2M of [EBITDA](https://searchspheresource.com/glossary/ebitda), an owner selling 70% takes about $8.4M off the table and keeps 30% of whatever the next sale brings.

Source: https://searchspheresource.com/glossary/recapitalization
Not dated: A definition is editorial: what a term means, why it matters, and an example. None of it reads a source that can go stale, so there is no date to take and a stamped one would be the build time wearing a costume.

Site index for machines: https://searchspheresource.com/llms.txt