Fatima
Mergers and Other Forms of Corporate Restructuring
Mergers and Other Forms of Corporate Restructuring
Sources
of Value Strategic Acquisitions Involving Common Stock Acquisitions and Capital Budgeting Closing the Deal
Mergers and Other Forms of Corporate Restructuring
Takeovers,
Tender Offers, and
Defenses Strategic Alliances Divestiture Leveraged Buyouts
What is Corporate Restructuring?
Any change in a company’s: 1. Capital structure, 2. Operations, or 3. Ownership that is outside its ordinary course of business.
So where is the value coming from (why restructure)?
Why Engage in Corporate Restructuring?
Sales enhancement and operating economies* Improved management Information effect Wealth transfers Tax reasons Leverage gains Management’s personal agenda
* Will be discussed in more detail in the following two slides.
Sales Enhancement and Operating Economies
Sales enhancement can occur because of market share gain, technological advancements to the product table, and filling a gap in the product line. Operating economies can be achieved because of the elimination of duplicate facilities or operations and personnel. Synergy -- Economies realized in a merger where the performance of the combined firm exceeds that of its previously separate parts.
Sales Enhancement and Operating Economies
Economies of Scale -- The benefits of size in which the average unit cost falls as volume increases.
Horizontal merger: best chance for economies Vertical merger: may lead to economies Conglomerate merger: few operating economies Divestiture: reverse synergy may occur
Strategic Acquisitions Involving Common Stock
Strategic Acquisition -- Occurs when one company acquires another as part of its overall business strategy.
When the acquisition is done for common stock, a “ratio of exchange,” which denotes the relative weighting of the two companies with regard to
Mergers and Other Forms of Corporate Restructuring
Sources
of Value Strategic Acquisitions Involving Common Stock Acquisitions and Capital Budgeting Closing the Deal
Mergers and Other Forms of Corporate Restructuring
Takeovers,
Tender Offers, and
Defenses Strategic Alliances Divestiture Leveraged Buyouts
What is Corporate Restructuring?
Any change in a company’s: 1. Capital structure, 2. Operations, or 3. Ownership that is outside its ordinary course of business.
So where is the value coming from (why restructure)?
Why Engage in Corporate Restructuring?
Sales enhancement and operating economies* Improved management Information effect Wealth transfers Tax reasons Leverage gains Management’s personal agenda
* Will be discussed in more detail in the following two slides.
Sales Enhancement and Operating Economies
Sales enhancement can occur because of market share gain, technological advancements to the product table, and filling a gap in the product line. Operating economies can be achieved because of the elimination of duplicate facilities or operations and personnel. Synergy -- Economies realized in a merger where the performance of the combined firm exceeds that of its previously separate parts.
Sales Enhancement and Operating Economies
Economies of Scale -- The benefits of size in which the average unit cost falls as volume increases.
Horizontal merger: best chance for economies Vertical merger: may lead to economies Conglomerate merger: few operating economies Divestiture: reverse synergy may occur
Strategic Acquisitions Involving Common Stock
Strategic Acquisition -- Occurs when one company acquires another as part of its overall business strategy.
When the acquisition is done for common stock, a “ratio of exchange,” which denotes the relative weighting of the two companies with regard to