Majority Recap

Definition

A transaction structure where a PE firm acquires a majority ownership stake while the founder or owner-operator retains a meaningful minority position (typically 20-40%). The retained equity gives the founder "skin in the game" and alignment with the PE partner on value creation. This contrasts with full buyouts where the PE firm acquires 100%.

Context

In Ep. 21, Glenn Oken describes majority recaps as "the vast majority" of Mangrove's deals, with owner-operators keeping about 30% on average. Glenn notes this structure is "impactful because if an owner operator is keeping a meaningful piece of the company, they obviously care a whole lot more about who they're partnering with. And that's our stock and trade. That's where we can win." The retained equity creates a natural advantage for firms with genuine operational value-add over pure financial buyers.

Related Terms

• Private Equity — the typical acquirer in a majority recap
• Platform Company — majority recaps are often the initial platform acquisition
• Enterprise Value — the metric used to size the transaction