Dividend Recapitalization
A strategy where a company borrows funds to pay a special dividend to its private equity owners, often used to extract value from a portfolio company before a sale.
Implications
A financial strategy where a company takes on new debt to pay a special dividend to its shareholders, often used by private equity firms to extract value from a company without selling their equity stake, potentially increasing the company's leverage.
Example
Example: A private equity-owned manufacturing firm undergoes dividend recapitalization, borrowing funds to issue a large dividend to its investors, while maintaining ownership of the company.
Related Terms
Different from a regular dividend, which is paid out from profits, dividend recapitalization involves borrowing to fund a dividend, increasing the company�s debt.
Get INSTANT comprehensive market research of any industry
Chat with AII Consultant Now!
