easy · Private Equity
What is the primary rationale for a PE sponsor to execute a 'Dividend Recapitalization' during the holding period of a portfolio company?
- To accelerate returns and de-risk the investment by returning a portion of capital to LPs before an exit.
- To comply with maintenance covenants that require the company to maintain a certain debt-to-equity ratio.
- To increase the company's EBITDA by reducing interest-bearing debt on the balance sheet.
- To prepare the company for an IPO by cleaning up the equity section of the balance sheet.
Sign up free to see the explanation and track your rank →
More Private Equity practice
- If the actual SOFR rate drops to 0.50%, what is the total interest rate paid by the borrow
- In a European (whole-fund) waterfall, a fund has called $100… — How much 'carried interest
- What is the fund's Total Value to Paid-In (TVPI) multiple?
- What is the new effective conversion price for the growth equity investor?
- What is the maximum debt allowed if the leverage covenant is set at 5.0x Covenant EBITDA?
- If EBITDA remains exactly the same and no debt is paid down, which lever is the sole sourc
- If net debt remained constant at $200M throughout the hold, what was the primary source of
- Which company will report a higher 'Gross Margin' and a higher ending 'Inventory' value on