Can I sell part of my business and keep running it?

Short answer: Yes. Selling 50 to 80 percent to a private equity firm while retaining a stake is called a recapitalization or partial exit. You take significant cash off the table now and keep equity upside for a second exit in 3 to 7 years. Many owners find the second check larger than the first.

How a partial sale works in practice

A private equity recapitalization works like this: a PE firm acquires a controlling stake (typically 60 to 80 percent) in your business, pays you cash at closing for that portion, and you roll the remaining equity into the new holding company. The PE firm then brings capital, operational expertise, and acquisition capacity to accelerate growth. After a hold period of 3 to 7 years, the firm runs a second sale process, and you sell your retained stake in that second transaction.

What you give up in a partial exit

• Control: A PE firm with majority ownership controls the board. Major decisions, including hiring, capital allocation, and strategy, require board approval. This is a fundamentally different operating environment than running a wholly-owned business.
• Timeline certainty: The second exit happens on the PE firm's schedule, not yours. If market conditions are unfavorable in year five, they may hold longer.
• Culture continuity: PE firms typically install financial reporting requirements, management incentive plans for your leadership team, and sometimes a CFO with more institutional experience than your current finance lead.
• Full liquidity now: The partial sale does not solve for estate planning, diversification urgency, or situations where you need all proceeds immediately.

Which owners are best suited for a partial exit

The structure works well when the owner wants liquidity without fully exiting, believes the business has significant remaining upside, is willing and able to continue as CEO or in a senior operating role, and can operate effectively inside a PE-backed governance structure. It is less appropriate if the owner wants full operational independence, is planning to retire immediately after the transaction, or has personal financial needs that require 100 percent of sale proceeds at closing.

Other partial-exit structures

Beyond a PE recap, partial exits can take other forms:

• Minority recapitalization: Selling 20 to 49 percent to an investor while retaining control. Less common but available through growth equity firms and family offices.
• Employee Stock Ownership Plan (ESOP): Selling to a trust that holds shares for employees. Tax-advantaged but complex to structure and operates under different economics than a PE recap.
• Management buyout with seller financing: Selling to your management team with you providing some of the acquisition financing, typically structured as a seller note with interest.

See the full article on earnouts and rollover equity for how retained equity and seller-side deal structures affect total economics at closing and beyond.