5098498
Description
Mind Map by christian.mogste, updated more than 1 year ago
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Created by christian.mogste
about 8 years ago
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5. Corporate
restructuring
- Overview
- 1. Asset restructuring
- 2. Equity and liability restructuring
- 3. Financial effect of corporate restructuring
- 1. Asset restructuring
- 1. Asset restructuring
- 1.1 Framework for corporate restructuring
- Quickly adapt
- Divestures
- Spin offs
- Split offs
- Equity carve out
- Parent sell shares of proportion of assets and maintains controll
- Tracking stock
- Liquidation
- Dual class
- A : Voting rights
- B: Dividend
- B: Dividend
- MBO/LBO/MBI
- Going
private
- MBO: Managers of company bus it
- MBI: Managares buys another company
- Financed by debt
- Going
private
- A : Voting rights
- Close down of subsidiary
- Asset distributed along creditors and equity holders
- Dual class
- Common stocks issued b parent that only tracks this division
- Liquidation
- Parent sell shares of proportion of assets and maintains controll
- Parent shareholders receive stock in the new company in exchange for the parent shares
- Equity carve out
- Shares in assets created and distributed to shareholders
- Split offs
- Sale of portions of a firm
- Seller perspective: Focus
- Buyer perspective: Strategic
- Buyer perspective: Strategic
- Seller perspective: Focus
- Spin offs
- Quickly adapt
- Rationale
- Financial
- Regain financial health
- Redue leverage
- Return cash to shareholders
- Adding value
Annotations:
- Sell assets to somebody who can use it better
- Tax gains
- Large additional investment required
- Harvesting past sucess
- MBO
- Reversing mistakes
Annotations:
- Following failed attempt to diversify
- Profitability
- Reversing mistakes
- MBO
- Harvesting past sucess
- Large additional investment required
- Adding value
- Return cash to shareholders
- Redue leverage
- Regain financial health
- Strategic
- Strategic
- Adjust to changing environment
- Dismantling conglomerates
- Dismantling conglomerates
- Adjust to changing environment
- Strategic
- Legal
- Financial
- 1.1 Framework for corporate restructuring
- 2. Equity and liability restructuring
- Buy back shares
- Issue new debt
- Refinancing
- Buy back shares
- 3. Financial effects of corporate restructuring
- Balance sheet effects
- Positive market reactio
- Short term market reaction
- Long term market reatiocn
- 76 % 3-year mean return
- 76 % 3-year mean return
- Divestment: 1-2% announcemnet date
- Spin offs: 3-5% on announcement date
- Equity carve out:2-3%
- Long term market reatiocn
- Rationale
- Cash availability
- Market values focused companies
- Remaining asset used more efficiently
- Overcome tax and regulatory constraint
- Reduce gearing and regain financial health
Annotations:
- Leverage goes down --> beta goes down --> cost of capital goes down -- > price goes up.
- Signal
Annotations:
- Divestment: Signal financial distress Spin-offs: Signal focus
- Reduce gearing and regain financial health
- Overcome tax and regulatory constraint
- Remaining asset used more efficiently
- Market values focused companies
- Cash availability
- Short term market reaction
- Balance sheet effects
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