Leveraged Dividend Recapitalizations

This practice note examines the metrics used for identifying opportunities for executing a successful leveraged dividend recapitalization, the potential risks surrounding leveraged dividend recapitalizations, and risk mitigation strategies. A leveraged dividend recapitalization is a partial exit strategy of private equity sponsors, whereby proceeds of a new indebtedness incurred by a portfolio company are used to fund a special/one-off dividend distribution to the portfolio company's stockholders.