PRIVATE EQUITY 2

THE « DIVIDEND RECAPITALIZATIONS » : A CONTROVERSIAL PRACTICE NOW REACHING A RECORD PACE ON WALL STREET.

IN THESE DEALS, KNOWN AS « DIVIDEND RECAPITALIZATIONS », PRIVATE-EQUITY-OWNED COMPANIES RAISE CASH BY ISSUING DEBT.

THE PROCEEDS ARE DISTRIBUTED IN THE FORM OF DIVIDENDS TO BUYOUT GROUPS.

THIS TACTIC ROSE IN POPULARITY BEFORE THE FINANCIAL CRISIS.

THE RESURGENCE HAS BEEN HELPED BY INVESTORS ‘ APPETITE FOR HIGH-YIELDING DEBT AT A TIME OF HISTORICALLY LOW INTEREST RATES.

CRITICS SAY THE DIVIDENDS , WHICH ARE DISCLOSED IN OFFERING DOCUMENTS, SADDLE A COMPANY WITH DEBT, POTENTIAL BURDENING ITS OPERATIONS, WHILE REDUCING A PRIVATE – EQUITY FIRM’S INVESTMENT EXPOSURE.

« DIVIDEND RECAPITALIZATIONS » : A NEW STRATEGIC WAY FOR PRIVATE EQUITY FIRMS TO MAKE MONEY ?

PHLDUCX