Private equity dividend recapitalization

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Aug 28, 2019 · A dividend recap happens 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 equity firm, which can authorize a dividend recapitalization as an alternative to the company declaring regular dividends, based on earnings. In private equity, it is frequently used as a method of exiting an investment. In such a case, dividend recapitalization is a viable alternative to conventional exit routes such as a sale of the stake to another private equity firm or an Initial Public Offering (IPO).

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Dividend recapitalizations can accelerate returns for equity investors. Current interest rates and loan terms make them especially attractive today, but that window of opportunity may be closing. Companies planning to pursue a dividend recap should act quickly, but only with the added confidence of having a solvency opinion. Equity-based carry is the traditional concept of carry from the time private equity firms came into being. Interest in a fund is allocated as shares based on each Limited Partner’s capital contribution, with a certain percentage of these shares (typically 20%) allocated to the General Partner as carry. The dividend yield is the sum of a company's annual dividends per share, divided by the current price per share. By investing in companies with stable and high dividend yields, investors can secure a relatively stable cash flow. However, dividend yields can be high when a company is facing financial ...

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Aug 12, 2015 · The seller would not mind selling up to just less than 50% of the company. If he did so, he would receive proceeds before taxes of $13.7 million assuming a 49% sale of equity. The seller, however, believed that his company, because of its growth potential and the ability to replicate its operations nationally,...

dividend recapitalization definition: an occasion when a company borrows money in order to pay a dividend to investors: . Learn more. The public company, in turn, can receive a step-up in the tax basis of its share of partnership assets that, in many cases, can result in additional tax deductions. Following the IPO, the legacy partners will continue to benefit from the flow-through nature of a partnership,... Oct 24, 2019 · Dividend recapitalization is the fastest way to partially exit an investment. A dividend recapitalization can be seen as a very effective way to quickly recover an initial investment. Compared with other exit options such as IPO or a strategic sale, a dividend recap doesn’t require months of processing to take place.

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2019 News Archive October 2019. Five Points Capital leads the recapitalization of GrammaTech. View details. September 2019. Five Points Capital, in partnership with PNC Mezzanine Capital, invests subordinated debt and equity to support the acquisition of Industrial Valve by KCM Capital Partners. Nov 10, 2017 · Dividend recapitalization can be an attractive mechanism for an owner of a mid-size company who wants to diversify his or her net worth without surrendering equity or corporate control.