Private Equity Firms Return—Tentatively—to Debt-Fueled Payouts

More buyout firms are using borrowed money to extract cash from companies they control, hoping to boost profits and please investors at a time when selling assets is difficult.

Dormant for a year, the market for dividend recapitalizations has in recent months begun to show signs of life. In these transactions a company controlled by private equity borrows money and uses it to make a payment to its owners.

Dividend…