Restructuring of a portfolio company's capital structure — typically issuing new debt to refinance existing debt and distribute residual proceeds (new debt − existing debt − fees) as a dividend to sponsor equity. Recap feasibility requires (i) prior de-leveraging via debt paydown or EBITDA growth, and (ii) credit markets that permit re-leveraging to the target's credit profile. Typical window: Years 2-4 post-close. Dividend recap returns capital mid-hold and de-risks the deal (sponsor money out before exit), without raising total deal MoIC — and in fact often modestly reducing IRR vs. holding because new interest drags EBITDA growth.