What is a dividend recapitalization ('dividend recap')?

• The company issues new equity in a public offering and hands the proceeds to the sponsor as a dividend
• The company uses its excess free cash flow to repay all outstanding debt ahead of schedule
• The sponsor sells the portfolio company to a strategic buyer and distributes the sale proceeds to its LPs
• A one-time cash payment the PE fund makes to the advisory bankers who sourced the original deal
• The portfolio company raises new debt to pay a dividend to the sponsor, returning cash without a sale