Corporate Restructing

1. PRESENTED BY:-
SHWETA SINGH
SUSHMITA SINGH
SANDEEP DEVNATH
SECTION B

2. Corporate Restructuring?
• The process involved in changing the organization of
a business. Corporate restructuring can
involve making dramatic changes to a business by
cutting out or merging departments that often has
the effect of displacing staff members.

3. Types of Restructuring
• Expansion: Mergers, Acquisitions, Takeovers, Joint
Ventures.
• Contraction: Sell Offs, Spin Offs, Split Offs, Split Ups.
• Changes in ownership: Leveraged Buyout, Going
Private.

4. Merger or Amalgamation
• A merger refers to the process whereby at least two
company combine to form one single company.
• It is a financial tool used for enhancing long term
profitability by expanding their operations.
• It is done in order to increase efficiency and
sometimes to avoid competition.

5. • Merger or amalgamation may take two forms:
 Absorption: It is a combination of two or more
companies into an existing company.
 Consolidation: It is a combination of two or more
companies into a new company.

6. Reasons for Merger
• Gaining a competitive advantage or larger market
share.
• Diversifying products and services.
• Cutting costs.
• Managerial Effectiveness.
• Tax Benefits.

7. Forms of Merger
• Horizontal Merger: It is a business consolidation that
occurs between firms who operate in the same
space, often as competitors offering the same good
or service.
• Vertical Merger: It is a merger between two
companies producing different goods or services for
one specific finished product.

8. • Conglomerate Merger: It is a type of merger
whereby the two companies that merge with each
other are involved in different sorts of businesses.
• Concentric Merger: It is a type of merger where the
two companies coming together share some
common expertise that may possess mutually
advantageous.

9. Acquisition
• It is a corporate action in which a company buys
most, if not all, of the target company's ownership
stakes in order to assume control of the target firm.
• A substantial acquisition occurs when an acquiring
firm acquires substantial quantity of shares or voting
rights of the target company.

10. Takeover
• A takeover is the purchase of one company by
another.
• If the takeover goes through, the acquiring company
becomes responsible for all of the target company's
operations, holdings and debt.

11. Joint Venture
• It is a business arrangement in which two or more
parties agree to pool their resources for the purpose
of accomplishing a specific task.
• It takes place when two parties come together to
take on one project.

12. Strategic Alliance
• A strategic alliance is an agreement between two or
more parties to pursue a set of agreed upon
objectives needed while remaining independent
organizations. This form of cooperation lies between
mergers and acquisitions and organic growth.

13. Sell off
• When a company sells a part of its business to a third
party, it is called sell-off.
• It is a usual practice of a large number of companies
to sell off to unprofitable or less profitable
businesses to avoid further drain on its resources.

14. Spin Off
• It is the creation of an independent company
through the sale or distribution of new shares of an
existing business or division of a parent company.
• Businesses wishing to streamline their operations
often sell less productive or unrelated subsidiary
businesses as spinoffs.
• After the spin off, shareholders hold shares in two
different companies.

15. Divestiture
• It is the partial or full disposal of a business unit
through sale, exchange, closure or bankruptcy.
• Divestiture may result from a management decision
to no longer operate a business unit because it is not
part of a core competency.

16. Leveraged Buyout
• A leveraged buyout (LBO) is an acquisition of a
company or a segment of a company funded mostly
with debt.
• The basic idea behind an LBO is that the acquirer
purchases the target with a loan collateralized by the
target's own assets.
• High growth, high market share firms and high debt
capacity firms are generally the targets for LBOs.

17. Demerger
• A demerger is a form of corporate restructuring in
which the entity's business operations are
segregated into one or more components.
• It is the converse of a merger or acquisition.
• A demerger is often done to help each of
the segments operate more smoothly, as they can
now focus on a more specific task.