Recapitalize Meaning: Definition, Examples, and Translations
๐ฐ
recapitalize
[หriหหkรฆpษชtษlaษชz ]
Definition
finance, restructuring
To recapitalize means to change the capital structure of a company, often by altering the proportion of debt and equity. This process can involve issuing new shares, repaying debts, or restructuring existing financial obligations to stabilize or improve a business's financial condition. Recapitalization is frequently used as a strategic tool to raise additional capital or to strengthen a companyโs balance sheet during financial difficulties.
Synonyms
refinance, reorganize, restructure.
Examples of usage
- The company decided to recapitalize to manage its increasing debts.
- Investors were concerned about the need to recapitalize after the poor financial results.
- The firm successfully recapitalized through a mix of equity offerings and asset sales.
Translations
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Interesting Facts
Economics
- Recapitalization can come in different forms, such as issuing new shares or restructuring debt.
- Companies may recapitalize during financial distress to stabilize operations and attract investors.
- Governments may also incentivize recapitalization efforts to boost economic growth in struggling sectors.
History
- The practice gained momentum during the waves of mergers and acquisitions in the late 20th century.
- Major economic events, like the 2008 financial crisis, led to numerous corporations recapitalizing to survive.
- Historical instances of recapitalization often correlate with important shifts in market regulations and conditions.
Pop Culture
- Films often depict business turnarounds, with recapitalization as a key plot point for restoring companies to former glory.
- Books on entrepreneurship frequently highlight successful strategies involving recapitalization as a move towards recovery.
- Recent documentaries have explored major corporations and their recapitalization journeys, educating viewers on financial maneuvers.
Business Strategy
- Recapitalization is considered a strategic tool for companies to align their capital structure with their business goals.
- Investors analyze a company's recapitalization plan to assess its potential profitability and risk factors.
- Successful recapitalization can lead to increased shareholder confidence and a revitalized market position.
Origin of 'recapitalize'
Main points about word origin
- The term combines 're-', meaning again, and 'capitalize', which relates to capital or money.
- The word has roots in finance and economics, gaining popularity in the 20th century as businesses looked for ways to recover.
- In finance, it often refers to changing a company's structure or ownership to secure funding.
The term 'recapitalize' combines the prefix 're-', meaning 'again', with 'capitalize', which in this context refers to endowing something (usually a company) with capital. The word 'capitalize' itself is derived from 'capital', suggesting resources or assets used for business activities. Originally, 'capital' comes from the Latin 'capitale', which relates to the head or source, indicating that it is the principal or most important resource. The use of 'recapitalize' became more prominent in the 1980s and 1990s during significant corporate restructuring and leveraged buyouts. As businesses sought ways to stabilize finances after economic downturns or to leverage investment opportunities, the concept of altering financial structures became critical, thus solidifying 'recapitalize' as an essential term in financial and business lexicons.