E.g. my last time around-- there was a deal that would have paid back investors and even paid a little to employees... but the acquirer would have required key technical staff to stick around.

The only way that deal would have gotten done would be if it was possible to carve out enough funds for those key technical staff. (It wasn't, so instead it was an asset sale that did not pay back investors).

- I have never been part of a recapitalization or carveout (though I did do diligence on a couple of companies that would have recapitalized as part of a fundraise if funded)-- other than the normal term of stepping up the incentive option pool as part of a capital raise.

- Even so I pretty strongly feel there are times they are necessary tools, and are mostly used in this way.

- Of course, anything can be abused by people with poor ethics.