A recapitalization is a restructuring of a company's capital structure that changes who owns what without necessarily changing operations. Also called a recap, the restructuring covers the mix of debt, equity, share classes, and ownership distribution. It is sometimes used as an alternative to a full exit when founders want partial liquidity, when early investors want to recycle capital, or when private equity wants to take a meaningful stake while keeping the company independent. It is the middle ground between staying private and selling outright.
The major recap structures: leveraged recapitalization (the company takes on new debt to pay a dividend to shareholders or to repurchase shares, returning capital to existing ho...