The restructuring of a company's debt and equity mixture, typically involving changes in the ratio of debt to equity financing. This can include issuing new debt to pay dividends, converting debt to equity, or vice versa.
From prefix 're-' (again) plus 'capitalization' (from Latin caput, meaning head, referring to the total capital structure). The term became prominent in the 1980s during the leveraged buyout boom when companies frequently restructured their capital.
Recapitalization is like renovating your house's foundation - you're not changing what the company does, but you're completely rebuilding how it's financed, which can dramatically affect returns to shareholders and risk levels!
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