Table of Contents
LECTURES...................................................................................................................................................... 2
WEEK 1..................................................................................................................................................................2
WEEK 2..................................................................................................................................................................3
WEEK 3..................................................................................................................................................................5
WEEK 4..................................................................................................................................................................6
WEEK 5..................................................................................................................................................................8
WEEK 6................................................................................................................................................................10
HOMEWORK CASES..................................................................................................................................... 11
KHC BID FOR UNILEVER............................................................................................................................... 11
MCDONALD’S CASE................................................................................................................................................12
CANADIAN PACIFIC LIMITED.....................................................................................................................................13
EUROTUNNEL.........................................................................................................................................................13
EXTRA READINGS........................................................................................................................................ 14
RESTRUCTURING BEFORE SPIN-OFF............................................................................................................................14
MCKINSEY PERSPECTIVE ON SEPARATIONS..................................................................................................................14
IMPROVING THE MANAGEMENT OF COMPLEX BUSINESS PARTNERSHIPS............................................................................15
, Lectures
Week 1
1.
Corporate restructuring: corporate actions that change the existing structure of thee
business.
- Actions that implement the firm’s strategic plan (conceived and promoted by BOD)
- Sometimes, forced onto directors by shs, debtholders, other stakeholders (govs),
significant events.
Key types:
- Operating:
o Internal: exit a certain geographical area, change working relationship
between departments
o Cooperative: JV
o Divestitures and other separations (sales, spinoffs)
o M&A
- Financial (capital structure):
o Recapitalization: change mix of D/E
o LBO: recap with a lot of debt, transfer or control (typically PE funds)
- Restructuring in financial distress
o Reorganization / administration (save the business; legal)
o Liquidation: selling all assets for cash redistributing
Drivers:
- Underperformance (relative to peers?)/ competitive pressures
- Strategic refocusing: reduce nr of activities, letting go of some areas of operations
(sale or other separations)
- New technologies (electric cars)
- Regulatory changes (car emission regulations, capital regulations of banks)
- Globalisation (labour costs, manufacturing operations moved abroad or outsourced)
2.
Value Creation Framework: business investments must cover the firm’s cost of capital
(related to that investment).
RNOA = NOPAT / average NOA
also called ROCE, ROIC
Benchmark: required return on capital = WACC
lower = value destruction (have to cut out costs or sell business perhaps?)
3.
RNOA = NOPAT/sales x sales/avg NOA
= Profit margin x net operating assets turnover
LECTURES...................................................................................................................................................... 2
WEEK 1..................................................................................................................................................................2
WEEK 2..................................................................................................................................................................3
WEEK 3..................................................................................................................................................................5
WEEK 4..................................................................................................................................................................6
WEEK 5..................................................................................................................................................................8
WEEK 6................................................................................................................................................................10
HOMEWORK CASES..................................................................................................................................... 11
KHC BID FOR UNILEVER............................................................................................................................... 11
MCDONALD’S CASE................................................................................................................................................12
CANADIAN PACIFIC LIMITED.....................................................................................................................................13
EUROTUNNEL.........................................................................................................................................................13
EXTRA READINGS........................................................................................................................................ 14
RESTRUCTURING BEFORE SPIN-OFF............................................................................................................................14
MCKINSEY PERSPECTIVE ON SEPARATIONS..................................................................................................................14
IMPROVING THE MANAGEMENT OF COMPLEX BUSINESS PARTNERSHIPS............................................................................15
, Lectures
Week 1
1.
Corporate restructuring: corporate actions that change the existing structure of thee
business.
- Actions that implement the firm’s strategic plan (conceived and promoted by BOD)
- Sometimes, forced onto directors by shs, debtholders, other stakeholders (govs),
significant events.
Key types:
- Operating:
o Internal: exit a certain geographical area, change working relationship
between departments
o Cooperative: JV
o Divestitures and other separations (sales, spinoffs)
o M&A
- Financial (capital structure):
o Recapitalization: change mix of D/E
o LBO: recap with a lot of debt, transfer or control (typically PE funds)
- Restructuring in financial distress
o Reorganization / administration (save the business; legal)
o Liquidation: selling all assets for cash redistributing
Drivers:
- Underperformance (relative to peers?)/ competitive pressures
- Strategic refocusing: reduce nr of activities, letting go of some areas of operations
(sale or other separations)
- New technologies (electric cars)
- Regulatory changes (car emission regulations, capital regulations of banks)
- Globalisation (labour costs, manufacturing operations moved abroad or outsourced)
2.
Value Creation Framework: business investments must cover the firm’s cost of capital
(related to that investment).
RNOA = NOPAT / average NOA
also called ROCE, ROIC
Benchmark: required return on capital = WACC
lower = value destruction (have to cut out costs or sell business perhaps?)
3.
RNOA = NOPAT/sales x sales/avg NOA
= Profit margin x net operating assets turnover
