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Corporate Restructuring. EMP 51 Timothy A. Thompson. What is restructuring?. 1980’s: corporate restructuring identified with leveraged buyouts, LBO’s, LCO’s More generally, however, divestitures, carve out IPO’s, spin offs, etc.

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corporate restructuring

Corporate Restructuring

EMP 51

Timothy A. Thompson

what is restructuring
What is restructuring?
  • 1980’s: corporate restructuring identified with leveraged buyouts, LBO’s, LCO’s
    • More generally, however, divestitures, carve out IPO’s, spin offs, etc.
  • Early 1990’s: corporate restructuring identified with troubled debt restructuring: workouts and reorganization
impetus for restructuring
Impetus for restructuring
  • Stock market
    • Activist shareholders
    • Pension funds
  • Increasing competition
    • Global
    • Technological
  • Change in regulation
restructuring hexagon
Restructuring hexagon

Slightly modified from the McKinsey book.

Information gap

Current Market Value

Optimized firm value

Value status quo

Operating improvement

Incentives management with VBM

Value with financial

restructuring

Value with internal improvements

Value with improvements

Financial engineering: leverage, dual class stock, carve outs, tracking stock, employee ownership, debt restructuring

Divestiture activity, spin offs

and disposals

dimensions of restructurings
Dimensions of restructurings
  • Asset restructuring
    • Acquisitions
    • Divestitures
    • Spin offs
    • Corporate downsizing
    • Outsourcing
dimensions of restructuring ii
Dimensions of restructuring, II
  • Restructuring ownership structure, leverage
    • Exchange offers
    • Share repurchases
    • LBO’s, LCO’s
  • Restructuring equity claims (next slide)
restructuring equity claims
Restructuring equity claims
  • Inside vs. outside equity ownership
    • MBO’s, LCO’s
    • ESOP’s, Employee buyouts
    • Active investors, institutional blockholders
  • Restructuring equity claims
    • IPO
    • Spin off, carve out IPO, letter stock
dimensions of restructuring iii
Dimensions of restructuring, III
  • Ownership vs. control
    • Limited partnerships
    • Leasing
    • Joint ventures
    • Securitization
    • Project finance
  • Incentive restructuring
    • Value based management programs (EVA, etc.)
dimensions of restructuring iv
Dimensions of restructuring, IV
  • Corporate control
    • Antitakeover amendments
    • Dual-class recapitalizations
    • Greenmail/Standstill agreements
    • Poison pills/Charter amendments
    • Defensive asset/ownership restructurings
distress related restructuring
Distress related restructuring
  • Troubled debt restructuring
  • Workouts
  • Pre-packaged Chapter 11
  • Chapter 11 reorganizations
  • Liquidations