Recapitalization

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Recapitalization is a corporate move that changes how a company is funded by altering the mix of debt and equity. It often means replacing a large part of equity with debt, or the other way around. In more complex deals, the company may use mezzanine financing or other hybrid securities.

Examples:
- Leveraged recapitalization: the company borrows money (often by issuing bonds) to raise cash and then buys back its own shares. Current shareholders usually keep control.
- Leveraged buyout (LBO): an outside buyer borrows to acquire the company, typically transferring control away from the current owners.
- Nationalization: a government buys a controlling stake in the company, taking control from existing shareholders. Governments may do this to stabilize finances or meet public policy goals.

Recapitalization can be used to raise cash, rebalance risk, return capital to investors, fund growth, or change who controls the company.