Corporate restructuring strategies
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Corporate restructuring is about creating value for a company by closing large 'value gaps' that can arise for reasons like poor management or increased competition. The size of these value gaps can be billions of dollars for large companies. The objectives of restructuring are to evaluate current performance, identify new opportunities, and secure a competitive edge. Restructuring strategies include expansion strategies, reorganization strategies like sell-offs, and financial engineering strategies such as equity carve-outs, leveraged recapitalizations, and share repurchases.
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Corporate restructuring strategies
- 2. meaning Corporate restructuring is all about creating value. Of course , most of the daily decisions that you will make as professional managers or investors will have an impact on value. sometimes, however, the value of an enterprise falls significantly short of where it could be. In other words, a company can find itself facing a large ‘value gap’. the size of a value gap can be huge for large companies it can be billions of dollars.
- 3. Value gap can arises for variety of reasons • Poor management • Emergence of new strategic opportunities • Failure of the capital markets to recognize( i.e., market inefficiency) • Increased competition • Macro-economic shocks • changes in technology, taxes or regulation.
- 4. Objectives of corporate restructuring • Evaluation of current endowments and performance • Fine tuning of available skills, technology and plant • Assessment of changes in business environment • Identification of new business opportunities • Securing of a competitive edge for the corporation
- 5. Strategies of corporate restructuring Expansion strategies Re organisiation strategies/sell-offs Financial engineering strategies Governance and control strategies alliances divestitures esop compensation arrangements franchising Equity carve-outs exchange Premium buy back Green mail investment Going public lbo Proxy contest Joint ventures privatization Leveraged recapitalization Take over defences mergers Spin-offs and split- ups Share repurchase Purchase of divisions of business unit Tracking stock Supplier network Tender offer
- 6. Thank you