The course involves analysis of corporate restructuring strategies including mergers, acquisitions, hostile takeovers and the market for corporate control, financial re-capitalization, leveraged buyouts, management buyouts, going-private decisions, fiduciary duties (Business Judgment Rule, Revlon Mode, Enhanced Scrutiny), reorganization under bankruptcy (Chapter 11, Chapter 7, 363 Sales, Pre-Packaged Bankruptcy), the role of private equity, and other methods of restructuring (spin-offs, split-ups, carve-outs and tracking stock). Transactions are examined from the perspectives of both the corporation and capital markets. Common "arbitrage" trading strategies involving corporate transactions and limits to arbitrage will also be discussed.
The course integrates the corporate governance and agency dimensions, financial and strategic management aspects, and legal and accounting considerations into a unified framework for investigating issues such as, pre-merger planning, fact-finding, accounting and tax implications, anti-trust problems, post-merger integration, and short-term and long-term shareholder wealth consequences of financial and organizational restructuring transactions. It combines applied theoretical approach with the case study method through detailed analysis of domestic and global restructuring deals. The course is designed so as to create an interface or link between the academic and the practitioner perspectives of various dimensions of corporate restructuring process.
Financial topics include:
- Accretion vs. Dilution Analysis
- The P/E Problem in Acquisitions
- Strategic vs. Financial Acquisitions
- The Role of Private Equity Firms in Acquisitions
- Structuring Offers and Forms of Payment: Cash vs. Stock; Fixed vs. Floating Stock Payments
- Hedging In M&A: Earn-Outs, Collars and Price Guarantees
- Defense Tactics
- Hostile Takeovers and the Role of Activist Shareholders
- Merger of Equals
- Corporate Restructuring: Spin-Offs, Split-Ups, Equity Carve-Outs and Tracking Stock
- Recapitalization of Troubled Companies: Out-of-Court, In-Court and Pre-Packaged Bankruptcy Procedures, Chapter 11 vs. Chapter 7 vs. 363 Sales
- Distressed Debt Investment
- LBOs Modeling and Valuation
- Asset Backed Securities
- The Role of Risk Arbitrageurs and Limits to Arbitrage
Who Should Take This Course?
This course is aimed at students planning to work for investment banks and corporate advisory firms involved in business restructuring and turnarounds, mergers and acquisitions, and financial reorganization transactions. It offers a comprehensive strategic perspective, a framework of conceptual and theoretical paradigms, and applied tools for deal design and corporate valuations that may facilitate students establishing their own consulting and advisory services.
If a student does not meet the prerequisite requirements, s/he may take this course only if the permission of the instructor is given. An understanding of financial options will be assumed.
VC/PE Pathway - Corporate Restructuring
VC/PE Pathway - Equity Growth
All Students: FINC-442-0