Alok Kumar

6/8/2012

1. Introduction to Corporate Restructuring

The most contemporary topic in the modern day business

M&A activities linked with strategic decision of the modern day enterprise
Require process based studies

Mix of Science and Value Judgment

Huge job opportunities in consulting business Highly dynamic field

1. Introduction to Corporate Restructuring

6/8/2012

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Synergy sum of parts is more productive and valuable than individual components (1+1 = 11)

II. Financial Factors Target company being undervalued III. Tax Motive

1. Introduction to Corporate Restructuring

6/8/2012

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Expansion

II. Sell-offs

III. Corporate Control

IV. Changes in Ownership Structure

1. Introduction to Corporate Restructuring

6/8/2012

Mergers and Acquisitions - means any transaction that forms one economic unit from two
or more units.

Horizontal Merger firms from same kind of business activity. Vertical Merger firms involve different stages of production. Conglomerate Merger firms from unrelated business activities.

Tender Offers one party asks the shareholder of the other firm to submit their shares to get
control stake.

Joint Ventures only fraction of business activities are involved.

1. Introduction to Corporate Restructuring

6/8/2012

Spin-offs creates a separate new legal entity. Shares are distributed on pro rata

basis to existing shareholders of the parent company. No cash transfer by the

original parent.
Split-offs - a portion of existing shareholder receive shares of a subsidiary in exchange of parent companys shares. Split-up parent company divided into series of split-offs. Parent company does not exist.

Divestitures - sale of portion of the firm to an outsider third party against cash. No new legal entity is formed as the portion bought by existing firm.
Equity Carve-outs sale of portion of the firm via an equity offering to outsiders.

1. Introduction to Corporate Restructuring

6/8/2012

Premium Buy-backs repurchase of ownership interest at premium to

market price. (Green-mail)

Standstill Agreements a voluntary contract in which the stockholder who bought out agrees not to make further attempt to take-over the company in the future. Antitakeover Amendments Proxy Contests - regarded directed against the existing management.

1. Introduction to Corporate Restructuring

6/8/2012

Exchange Offers Share Repurchases Going Private Leveraged Buy-outs

1. Introduction to Corporate Restructuring

6/8/2012

Investment Bankers Attorneys Accountants Valuation Experts

1. Introduction to Corporate Restructuring

6/8/2012

Reverse Merger - Leveraged Buy-outs (SPV Model) Management Buy-outs Merger Arbitragers Holding Company Across the Boundaries

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First Wave (1897-1904) Horizontal Merger Second Wave (1916-1929) Third Wave (1965-1969) - Conglomerate Merger Fourth Wave (1984-1989) Fifth Wave (1992 onward)

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Alok Kumar alok.kuma@gmail.com

6/8/2012

1. Introduction to Corporate Restructuring

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