Which one of them help the owner to retain the higher control?
Both of them give control to same extent to the other owner. But Personal line of credit is bit riskier as you still have concentrated position held in the company and if company is public limited company, you are more accountable as well.
In leveraged recaptilization, you are able to sell some of the shares to the private equity depending upon the current status of the tax and utlimately sold all shares in the end and participate partially in the upside of the company.
So effectively Personal line of credit gives more control because you have highest % ownership in the company
Personal line of credit gives you more, with leveraged recap you’re essnetially selling out the majority to a PE firm.
Personal Line of credit: You retain the entire equity stake but pledge assets or the equity in a company for a loan. This is essentially a form of secured borrowing, but no exchange of equity.
Levered Recap: This is usually an exit strategy. An outside buyer buys a stake from you, usually a majority stake (60%–80%) with the implicit agreement you stay for a few years until they buy the rest. In a good levered recap the buyer brings on a “CEO in waiting” to learn the business, your market, etc.
So one doesn’t transfer any equity and the other transfers the majority of the business. You do the math.
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And what about reduction in concentration risk?I think lev recap gives better reduction in concentrated risk.