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when initiated by an outside party, or a leveraged recapitalization when initiated by the company itself for internal reasons. These types of recapitalization can be minor adjustments to the capital structure of the company, or can be large changes involving a change in the power structure as well.
82:
There are downsides, however. This form of recapitalization can lead a company to focus on short-term projects that generate cash (to pay off the debt and interest payments), which in turn leads the company to lose its strategic focus. Also, if a firm cannot make its debt payments, meet its
55:
Leveraged recapitalizations are used by privately held companies as a means of refinancing, generally to provide cash to the shareholders while not requiring a total sale of the company. Debt (in the form of bonds) has some advantages over equity as a way of raising money, since it can have
232:
1286:
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857:
99:. Therefore, the additional debt burden of a leveraged recapitalization makes a firm more vulnerable to unexpected business problems including
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933:
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that is smaller than their after-tax interest rate on corporate bonds, and that operate in markets that allow share repurchases.
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U.C. Peyer and A. Shivdasani, "Leverage and
Internal Capital Markets: Evidence from Leveraged Recapitalizations",
47:
to raise money and using the proceeds to buy the company's stock or to pay dividends. Such a maneuver is called a
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and can enforce a cash discipline. The reduction in equity also makes the firm less vulnerable to a
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Leveraged recapitalizations can be used by public companies to increase
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159:. According to these authors, leveraged companies increased their
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891:
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This private equity or venture capital-related article is a
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shows this only works for public companies that have an
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171:
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43:Such recapitalizations are executed via issuing
148:Volume 59, Issue 3, March 2001, Pages 477-515.
1471:
858:
226:
1360:Private equity and venture capital investors
169:
1478:
1464:
1395:
1375:
1332:Taxation of private equity and hedge funds
1149:Private investment in public equity (PIPE)
865:
851:
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817:
233:
219:
174:Dictionary of Finance and Investment Terms
199:"Recapitalization" at Investorwords.com
16:Change of a company's capital structure
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163:from 17% to 50% in a span of 12 years.
846:
214:
117:Capital structure substitution theory
73:Capital structure substitution theory
1434:
31:, usually substitution of debt for
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14:
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1132:Publicly traded private equity
613:Debtor-in-possession financing
146:Journal of Financial Economics
138:
1:
1400:List of venture capital firms
132:
27:is a change of the company's
1450:. You can help Knowledge by
1380:List of private equity firms
1137:Business Development Company
553:Staggered board of directors
7:
670:Accretion/dilution analysis
110:
38:
10:
1528:
1433:
1224:High-net-worth individuals
1014:Leveraged recapitalization
633:Leveraged recapitalization
25:leveraged recapitalization
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1247:
1166:
1112:Limited liability company
1090:
1072:Venture capital financing
1027:
1019:Dividend recapitalization
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884:
812:
804:Valuation using multiples
789:Sum-of-the-parts analysis
759:Modigliani–Miller theorem
660:
618:Dividend recapitalization
598:
446:
433:Secondary market offering
336:
325:
252:
127:Dividend recapitalization
822:List of investment banks
737:Free cash flow to equity
563:Super-majority amendment
488:Management due diligence
428:Seasoned equity offering
1179:Institutional investors
533:Shareholder rights plan
523:Post-merger integration
493:Managerial entrenchment
463:Contingent value rights
403:Initial public offering
1317:Liquidation preference
1282:Distribution waterfall
1234:Sovereign wealth funds
675:Adjusted present value
538:Special-purpose entity
376:Direct public offering
346:At-the-market offering
1390:Venture capital firms
1142:Venture capital trust
690:Conglomerate discount
170:Downes, John (2003).
161:debt-to-capital ratio
150:Available free online
95:which often leads to
1512:Private equity stubs
1370:Private equity firms
1098:Private equity firms
1047:Post-money valuation
924:Equity co-investment
712:Economic value added
707:Discounted cash flow
1420:Portfolio companies
1337:Undercapitalization
1189:Insurance companies
1107:Limited partnership
1052:Pre-money valuation
297:Senior secured debt
91:its debt it enters
1272:Capital commitment
1042:Business incubator
1009:Buy–sell agreement
832:Outline of finance
744:Market value added
727:Financial modeling
685:Business valuation
608:Debt restructuring
386:Follow-on offering
371:Corporate spin-off
329:(terms/conditions)
246:investment banking
204:2012-04-03 at the
155:2006-01-16 at the
93:financial distress
69:earnings per share
1502:Corporate finance
1459:
1458:
1428:
1427:
1277:Capital structure
1162:
1161:
1004:Divisional buyout
999:Management buyout
994:Financial sponsor
840:
839:
764:Net present value
749:Minority interest
680:Associate company
656:
655:
623:Financial sponsor
543:Special situation
513:Pre-emption right
503:Minority discount
413:Private placement
312:Subordinated debt
267:Exchangeable debt
254:Capital structure
242:Corporate finance
29:capital structure
21:corporate finance
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1219:Commercial banks
1209:Investment banks
1117:Carried interest
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981:
885:Investment types
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860:
853:
844:
843:
830:
829:
820:
819:
722:Fairness opinion
717:Enterprise value
700:Weighted average
628:Leveraged buyout
483:Drag-along right
381:Equity carve-out
338:Equity offerings
334:
333:
330:
302:Shareholder loan
287:Second lien debt
282:Preferred equity
262:Convertible debt
235:
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221:
212:
211:
189:
177:
164:
142:
122:Leveraged buyout
105:financial crises
62:hostile takeover
49:leveraged buyout
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1424:
1410:Angel investors
1346:
1297:High-yield debt
1250:financial terms
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1243:
1158:
1086:
1067:Startup company
1023:
977:
971:
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880:
878:venture capital
871:
841:
836:
808:
784:Stock valuation
779:Residual income
695:Cost of capital
652:
648:Project finance
638:High-yield debt
594:
573:Tag-along right
498:Mandatory offer
468:Control premium
449:
442:
418:Public offering
366:Bought out deal
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327:
321:
248:
239:
206:Wayback Machine
195:
186:
167:
157:Wayback Machine
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1507:Private equity
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1497:Business terms
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1229:Family offices
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1214:Merchant banks
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1124:
1122:Management fee
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1087:
1085:
1084:
1079:
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1037:Angel investor
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874:Private equity
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799:Terminal value
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732:Free cash flow
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643:Private equity
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272:Mezzanine debt
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193:External links
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85:loan covenants
77:earnings yield
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1194:Fund of funds
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1185:
1184:Pension funds
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1082:Venture round
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942:Early history
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351:Book building
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22:
1452:expanding it
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1430:
1342:Vintage year
1267:Capital call
1239:Crowdfunding
1174:Corporations
1077:Venture debt
1013:
774:Real options
632:
590:Tender offer
450:acquisitions
438:Underwriting
423:Rights issue
326:Transactions
178:. Barron's.
173:
168:
145:
140:
81:
66:
58:tax benefits
54:
42:
24:
18:
1204:Foundations
1127:Pledge fund
919:Secondaries
548:Squeeze-out
518:Proxy fight
448:Mergers and
361:Bought deal
292:Senior debt
1491:Categories
1292:Envy ratio
1199:Endowments
1062:Seed money
976:Terms and
794:Tax shield
754:Mismarking
558:Stock swap
508:Pitch book
478:Divestment
356:Bookrunner
277:Pari passu
133:References
101:recessions
97:bankruptcy
1262:Cap table
1167:Investors
1091:Structure
909:Mezzanine
897:Leveraged
769:Pure play
662:Valuation
528:Sell side
391:Greenshoe
1312:Leverage
1248:Related
978:concepts
600:Leverage
578:Takeover
473:Demerger
458:Buy side
202:Archived
153:Archived
111:See also
89:rollover
39:Overview
1322:M&A
1029:Venture
934:History
904:Venture
583:Reverse
568:Synergy
408:Pre-IPO
396:Reverse
317:Warrant
1287:EBITDA
986:Buyout
914:Growth
892:Buyout
182:
71:. The
33:equity
1102:funds
967:2020s
962:2010s
957:2000s
952:1990s
947:1980s
307:Stock
45:bonds
1448:stub
1154:SPAC
1100:and
1057:SAFE
876:and
244:and
180:ISBN
103:and
23:, a
1327:PME
1307:IRR
1302:IPO
1257:AUM
87:or
19:In
1493::
107:.
64:.
35:.
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866:e
859:t
852:v
234:e
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188:.
Text is available under the Creative Commons Attribution-ShareAlike License. Additional terms may apply.