Dividend recapitalization
A dividend recapitalization (often referred to as a dividend recap) in finance is a type of leveraged recapitalization in which a payment is made to shareholders. As opposed to a typical dividend which is paid regularly from the company's earnings, a dividend recapitalization occurs when a company raises debt —e.g. by issuing bonds to fund the dividend.[1][2]
These types of recapitalization can be minor adjustments to the
Typically a dividend recapitalization will be pursued when the equity investors are seeking to realize value from a private company but do not want to sell their interest in the business.[1][4]
Example
Between 2003 and 2007, 188 companies controlled by private equity firms issued more than $75 billion in debt that was used to pay dividends to the buyout firms.[5]
In their relatively brief period of management of
See also
References
- ^ a b Bristow, Matthew (29 November 2010). "Dividend Recapitalizations: Cash Alternatives for Private Equity". The Journal Record. Retrieved 12 February 2020.
- ISBN 978-0-13-376152-8.
- ^ Creswell, Julie; Peter, Lattman (29 September 2010). "DEALBOOK; Private Equity Thrives Again, but Dark Shadows Loom". The New York Times. Retrieved 12 February 2020.
- ISBN 978-1-118-72776-8.
- ISSN 0362-4331. Retrieved 12 February 2020.
- ^ Corkery, Michael, and Ben Protess, "How the Twinkie Made the Super-Rich Even Richer", The New York Times, December 10, 2016. Retrieved 2016-12-11.
