Capital transmission is a private equity strategy consisting of financing the transfer of control of a mature business — typically a healthy SME or mid-size company — to a new owner, via an LBO, MBO or OBO. It differs from growth equity in that value creation relies not on organic growth but on the quality of the transfer and financial structure optimisation.

Capital transmission funds invest in companies with a specific profile: established activity with stable recurring cash flows, defensible competitive position, solid incumbent management or identified acquirer, and EBITDA between CHF 1 and 15 million. These criteria correspond precisely to the ideal targets of Franco-Swiss mid-market LBO transactions.

Independent business valuation is systematically required in capital transmission transactions, both to set the sale price and to structure the financing and calibrate the DSCR.

Example: a Vaud-based technical services SME (CHF 8.0 million revenue, CHF 1.4 million EBITDA) is transferred via an MBO to a regional capital transmission fund. The fund contributes CHF 2.8 million equity (50% of financing), management co-invests CHF 400,000, and CHF 2.4 million senior debt completes the CHF 5.6 million EV structure (4.0x EBITDA). Year 1 DSCR: 1.48x.

At Hectelion, we advise capital transmission transactions as independent financial counsel — from valuation to structuring and negotiation with fund partners.