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Corporate Restructuring is a Life Cycle Approach to Shareholder Value
Creation and Management

M & A is a generic term used to mean many different types of corporate

restructuring exercises. The various form of Corporate restructuring can be
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summarized under three heads:

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Ôaining control of the utilization of corporate assets and resources. This can
be done either by taking control through share holding or by purchase of the
asset itself. The accounting treatment differs depending upon the method of
takeover.
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A Company distributes all the shares it owns in a subsidiary to its own
shareholders implying creation of two separate public companies with same
proportional equity ownership. Sometimes, a division is set up as a separate
company.






Garent company has many 100% or near 100% subsidiaries. Each of them is
spun off as a public limited company.
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parent has substantial holding in a subsidiary. It sells part of that holding to
the public. "Gublic" does not necessarily mean shareholders of the parent
company. Thus the asset item "Subsidiary Investment" in the balance-sheet
of the parent company is replaced with cash. Garent company keeps control of
the subsidiary but gets cash. This may be the first stage of a two-stage
divestment transaction.
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A party is interested in buying out the stake in a company but lacks financial
resources. It forms a team of banks who are willing to fund the idea. The
team structures the deal after discussions with the company. The deal
structure involves the following steps:

The sponsor of the idea forms a shell company. The only asset is cash. The
debt-equity ratio is high. It is not listed. Shell Company purchases the shares
from existing shareholders of the target mostly paying for in cash. Target and
 shell company merge. Target is thus de-listed. The merged company is tightly
managed for cash. All debts are repaid in short period of, say, 1-5 years.
Sponsor takes the company public again, sells his stakes at a profit and exits.
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for activity of M & A, Restructuring , joint venture ,business opportunities and
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1. This chapter examined corporate restructuring, broadly defined as any episodic change in a
company¶s asset mix, capital structure, or ownership composition.
2. The central discipline underlying all corporate restructurings is business valuation, the art of
pricing all or part of a business.
3. Before valuing a business, it is necessary to decide whether to value the company¶s assets or
its equity, whether to value it in liquidation or as a going concern, and whether to value a
minority or a controlling interest.
4. The discounted cash flow approach to business valuation estimates the present value of the
target¶s free cash flows discounted at the target¶s weighted-average cost of capital.
5. Major challenges in discounted cash flow valuation are to estimate a forecast horizon and a
terminal value for the target firm. The forecast horizon should be at or beyond the date when
the target becomes a mature, slow-growth business. Common terminal value estimates
include a warranted multiple of the target¶s earnings or assets and present value calculations
presuming slow, perpetual growth.
6. The comparable-trades approach to business valuation infers the value of the target¶s equity
from the prices at which the shares of comparable, publicly traded firms trade. The resulting
value estimate frequently must be adjusted to reflect a lack of marketability or the fact that
the buyer is acquiring control of the business.
7. The comparable transactions approach to business valuation infers the value of the target¶s
equity from the prices at which recent acquisitions of peer companies took place. The resulting
value usually includes a control premium.
8. It is often appropriate for a buyer to pay a premium above the minority value of a business to
gain control. The maximum justifiable premium equals the present value of all value-
increasing changes contemplated by the buyer.
9. Three controversial, finance-driven, potential benefits from restructuring are increased interest
tax shields, enhanced management incentives, and owner control of free cash flow
10.Empirical evidence suggests that acquisitions typically create value, but the great
preponderance of it flows to selling shareholders. Leveraged buyouts appear to create
substantial value.

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 Indian enterprises are hunting, both globally and locally, to identify and utilize the right business
opportunity available in the market. Synergies are becoming important and our potential lies in
identifying the right combination of synergies for your growth.

Our professional team with their experience and innovative skills helps the client in understanding
their business potential and values underlying it, identifying the right opportunity or business partner
available globally and locally, to take the maximum advantage for maximum growth.

We believe that every enterprise may benefit from the Corporate Restructuring exercise, whether
internal or external, if it is best advised. The restructuring activities can attain best possible targets,
financial and legal, and provide efficient corporate structure for sustainable growth.

The myriad legal and regulatory provisions call for a high degree of experience & skills and there we
appropriately fit in. With recent spurt of acquisitions, it is imperative to translate the plan in an
effective manner to get maximum benefits. Once again, our unique matching of financial structuring
with legal backing comes to clients¶ benefits.

ñ Glanning & Advising Mergers & Amalgamations

ñ Corporate Restructuring
ñ åinancial re-engineering & Business Valuation
ñ Internal Restructuring
ñ Strategic Acquisitions & Takeovers
ñ £eal Negotiation & Structuring
ñ Equity £ivestments

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