Refinancing a portfolio company's debt — typically by incurring additional senior or unitranche debt — to fund a one-time distribution to the sponsor and LPs without a sale or IPO. Effects: re-leverages the company (often back to original LBO leverage), accelerates DPI/IRR for the PE fund, and increases credit risk to existing lenders (which is why dividend recaps usually require lender consent under restricted-payment covenants and a builder-basket test).