CAPITALIZATION CHANGE

A modification in the issued and outstanding securities of a company. Capitalization changes occur either through the issuance of additional shares or the repurchase or cancellation of existing shares. This can have a dilutive or accretive effect on a company's market capitalization, depending on the scenario.

A company will go through a number of capitalization changes as it progresses from a start-up to a successful business. The most dramatic capitalization change for an individual company may often occur at the initial public offering stage, when it makes the transition from a private entity to a public issuer. Moreover, changes in capitalization frequently arise as the result of certain corporate activities such as a stock buyback or an acquisition.