easy · Investment Banking
In a 'Dividend Recapitalization', a sponsor borrows money to pay itself a dividend.
How does this specifically impact the IRR of the investment?
- It decreases the IRR because the company now has more interest expense to pay
- It increases the IRR by accelerating the timing of cash inflows to the sponsor
- It increases the IRR by allowing the sponsor to write up the cost basis of its remaining equity
- It has no impact on IRR, only on the Multiple on Invested Capital (MOIC)
Sign up free to see the explanation and track your rank →
More Investment Banking practice
- What is the Multiple on Invested Capital (MOIC)?
- What is the control premium?
- Which valuation methodology would likely produce the 'floor' valuation for a mature indust
- Which of the following changes, held in isolation, would most likely achieve this?
- What is the Multiple on Invested Capital (MOIC)?
- If a company has an Unlevered Free Cash Flow (UFCF) of $500 million in Year 5, a WACC of 1
- What is the 3-year Compound Annual Growth Rate (CAGR)?
- If a company's Net Debt is negative, what is the relationship between its Equity Value and