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Home > Dictionary

Dividend Recapitalization 2Like

What Does Dividend Recapi ta l iza t ion Mean?When a company incurs a new debt in order to pay a special dividend to private investors or shareholders. This usually involves a company owned by a private investment firm , which canauthorize a dividend recapitalization as an alternative to selling its equity stake in the company.

Also known as a "dividend recap".

Investopedia explains Dividend Recapi ta l iza t ion The dividend recap has seen explosive growth, primarily as an avenue for private investment firmsto recoup some or all of the money they used to purchase their stake in a business. It is generallynot looked upon favorably by creditors or common shareholders because it reduces the creditquality of the company while only benefiting a select few.

Fi led Under : Alternative Investments , Hedge Funds ,Stocks

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Capital Structure

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Dividend

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