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    Other Forms of Corporate Restructuring

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    Dominic
    The document discusses various forms of corporate restructuring. It describes mergers and amalgamations, acquisitions and takeovers, divestitures, demergers, reduction of capital, joint ventures, and buyback of securities as some of the main forms of corporate restructuring. For each form, it provides a brief definition and explanation.

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    Other Forms of Corporate Restructuring

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    Dominic
    254 views16 pages
    The document discusses various forms of corporate restructuring. It describes mergers and amalgamations, acquisitions and takeovers, divestitures, demergers, reduction of capital, joint ventures, and buyback of securities as some of the main forms of corporate restructuring. For each form, it provides a brief definition and explanation.

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    The document discusses various forms of corporate restructuring. It describes mergers and amalgamations, acquisitions and takeovers, divestitures, demergers, reduction of capital, joint ventures, and buyback of securities as some of the main forms of corporate restructuring. For each form, it provides a brief definition and explanation.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    254 views16 pages

    Other Forms of Corporate Restructuring

    Uploaded by

    Dominic
    The document discusses various forms of corporate restructuring. It describes mergers and amalgamations, acquisitions and takeovers, divestitures, demergers, reduction of capital, joint ventures, and buyback of securities as some of the main forms of corporate restructuring. For each form, it provides a brief definition and explanation.

    Copyright:

    © All Rights Reserved
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    Download as pptx, pdf, or txt
    of 16

    forms of

    Corporate
    Restructuri
    ng
    Re po rt er: M I C H EL L E JA R
    OTHER FORMS OF C O R P O R AT E

    Corporate restructuring
    RESTRUCTURING

    Any change in the business capacity or


    portfolio that is carried out by inorganic
    route or any change in the capital
    structure of a company that is not in the
    ordinary course of its business or any
    change in the ownership of a company
    or control over its management or a
    combination of any two or all of the
    above.
    Hence, corporate restructuring may
    Re po rt er: M I C H EL L E JA R
    OTHER FORMS OF C O R P O R AT E
    RESTRUCTURING
    FORMS OF CORPORATE RESTRUCTURING
    1. Merger or
    Amalgamation
    A merger is a combination of two
    or more businesses into one business
    Amalgamation is the merger of
    one or more companies with another
    or the merger of two or more
    companies to form a new company, in
    such a way that all assets and
    liabilities of the amalgamating
    Re po rt er: M I C H EL L E JAR
    OTHER FORMS OF C O R P O R AT E
    RESTRUCTURING

    Merger or amalgamation may


    take two forms:
    1. Merger through Absorption:
    where transferor company merges into
    the transferee company and the
    transferor company stands dissolved
    without winding up.
    2. Merger through Consolidation:
    A consolidation is a combination of two
    or more companies into a new
    company. In this form of merger, all
    Re po rt er: M I C H EL L E JA R
    OTHER FORMS OF C O R P O R AT E
    RESTRUCTURING

    2. Acquisitions and Takeovers


    An acquisition may be defined as
    an act of acquiring effective control
    by one company over assets or
    management of another company
    without any combination of
    companies. Thus, in an acquisition
    two or more companies may remain
    independent, separate legal entities,
    but there may be a change in control
    of the companies.When
    R e p o r t e r : M I C Han
    ELLE JAR
    OTHER FORMS OF C O R P O R AT E
    RESTRUCTURING
    3. Divestiture
    Divestiture is a transaction through which
    a firm sells a portion of its assets or a
    division to another company.
    It is also a form of contraction for the
    selling company, means of expansion for
    the purchasing company. It represents the
    sale of a segment (assets, a product line, a
    subsidiary) to a third party for cash and
    securities.
    In short, divestiture means sale of assets,
    but not in a piecemeal manner.
    Re po rt er: M I C H EL L E JA R
    OTHER FORMS OF C O R P O R AT E
    4. Demerger RESTRUCTURING
    It is a form of corporate restructuring in which involves sale of
    segment of a company for cash or securities. It involves sale of only
    some assets of the firm.
    These assets may be a plant, division, product line and so on.
    Demerger can take three forms:
    Spin-off- a way to get rid of underperforming or
    non-core business divisions that can drag down
    profits.
    Split-up- is a transaction in which a company
    spin off all of its subsidiaries to its shareholders
    and ceases to exit.
    Split-off- is a transaction in which some, but not
    all, parent company shareholders receive shares
    in a subsidiary, in return for relinquishing their
    parent companys share.
    Re po rt er: M I C H EL L E JA R
    OTHER FORMS OF C O R P O R AT E
    RESTRUCTURING
    4. Reduction o Capital
    It is a process by which a company is allowed to
    extinguish or reduce liability on any of its shares
    in respect of share capital not paid up, or is
    allowed to cancel any paid-up share capital
    which is post or is allowed to pay-off any paid
    up capital which is in excess of its requirements.
    5. Joint Venture
    Is an arrangement in which two or more
    companies (called joint venture partners)
    contribute to the equity capital of a new
    company (called joint venture) in pre-decided
    proportion.
    Re po rt er: M I C H EL L E JA R
    OTHER FORMS OF C O R P O R AT E
    RESTRUCTURING
    They are typically formed for special purposes for
    a limited duration. It is a combination of subsets
    of assets contributed by two or more business
    entities for a specific business purpose and limited
    duration.
    Reasons for forming Joint Venture
    Build on a company strengths
    Spreading cost and risks
    Improving access to financial resources
    Economies of scale and advantages of size
    Access to new technologies and customers
    Access to innovative managerial practices
    Re po rt er: M I C H EL L E JA R
    OTHER FORMS OF C O R P O R AT E
    RESTRUCTURING

    6. Buy back of Securities


    When a company is holding excess
    cash, which it does not require in the
    medium term (say three to five years); it
    is prudent for the company to return this
    excess cash to its shareholders. Buy-back
    of securities is one of the methods used to
    return the excess cash to its shareholders.

    Re po rt er: M I C H EL L E JA R
    THANK
    YOU !

    Re po rt er: M I C H EL L E JA R
    What does 'Going Private' mean

    Going private is a transaction or a series of


    transactions that convert a publicly traded
    company into a private entity. Once a
    company goes private, its shareholders are
    no longer able to trade theirstocksin the
    open market.Private equityfirms will
    typically purchase a struggling company,
    make it into a private entity, reorganize its
    capital structure, and issue stocks once a
    profit can be realized.
    BREAKING DOWN 'Going Private

    A company typically goes private when its


    stakeholdersdecide that there are no longer
    significant benefits to be garnered as a
    public company.Privatizationwill usually arise
    either when a company's management wants
    to buy out the public shareholders and take
    the company private (a management buyout),
    or when a company or individual makes a
    tender offerto buy most or all of the
    company's stock. Going private transactions
    generally involve a significant amount of
    Companies are often taken private when
    they need time to restructure their debt or
    operations prior to becoming a public
    corporation once again.
    BREAKING DOWN 'Divestment

    Divestment involves a company selling its


    assets to improve its value and obtain
    higher efficiency. Many companies use
    divestment to sell off peripheral assets that
    enable their management teams to regain
    better focus on the core business. Proceeds
    from divestment are typically used to pay
    down debt, make capital expenditures, fund
    working capital, or pay a special dividend to
    a company's shareholders. While most
    divestment transactions are deliberate
    efforts, selling assets in some cases could be
    forced due to regulatory action.
    Privatization can refer to the act of
    transferring ownership of specified property
    or business operations from a government
    organization to aprivately ownedentity, as
    well as the transition of ownership from a
    publicly traded, or owned, company to a
    privately owned company. For a company to
    be considered privately owned, it cannot
    secure funding through publictradeson a
    stock exchange.

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