Corporate Restructuring & Turnarounds

1 Day In-House Training Course

In response to difficult market conditions and continued pressure from institutional investors, corporate restructuring seeks to maximise shareholder value through the re-arrangement of the equity ownership and debt obligations of parent companies and their subsidiaries. The processes described in this 1-day, in-house, training course allow a company to release cash, revert to core competencies, increase profits and, where publicly quoted, to enhance a stockmarket following.

If, however, it appears that a company is sliding towards insolvency, its directors and advisers will benefit from a clear understanding of the options available for companies in financial distress so that appropriate action can be taken while there is still time to make a difference.

Course Outline

  • The Motivation for Restructuring

    • Should a Restructuring be Considered – are the parts worth more than the whole?
    • Increasing the Perception of Value – evaluation, execution, explanation
    • Is a Restructuring Unavoidable – has the company run out of road?
    • Demolish the Lot? – strategy can no longer be tied to an entrenched structure
  • Optimum Equity Restructuring

    • Clarify Precise Objectives – guard against self-serving professional advice
    • Carve-Outs or Partial Spin-Offs – reasons why these are effective
    • Spin-Offs, Split-Offs & Split-Ups – let the shareholders decide
    • Tracking Stock – why it’s not very popular
    • Valuation of a Subsidiary – the value can largely be controlled by its parent
  • Avoidance of Potential Taxes

    • Income Tax, CGT, Stamp Duty & VAT – exclude their impact
    • Corporation Tax & SDLT – after the commercial decision, the deal is entirely tax driven
    • Degrouping Charges & Balancing Charges – avoid them with careful planning
    • Anti-Avoidance Provisions – the restructuring must have a bona fide commercial reason
  • Demerger Mechanics

    • Direct Dividend & Triangular Structures – where are the distributable reserves?
    • Direct or Indirect Reduction of Capital – objectives & requirements
    • Statutory Demergers & Schemes of Reconstruction – how to qualify for tax relief
    • Schemes of Arrangement – achieve a binding internal re-organisation through the court
    • Liquidation Schemes – start the restructuring with a clean sheet
    • Pre-Sale Hive-Downs – leave the rubbish behind
    • Share Buybacks – commercial reasons for a company to buy its own shares
  • Managing a Successful Turnaround

    • A Merger of Equals? – a dangerous concept, clarify roles, eliminate rivalries
    • Handling Staff and Political Problems – prioritise issues, review service agreements
    • Effective External Communication – bankers, press, customers, suppliers
    • Implementing Decisions – use of an integration manager, implement best practice
    • Avoiding Disintegration – lead from the front, secure and incentivise key personnel

Course Notes, Slides and Exercises

Participants will receive a booklet containing copies of 20 slides and 68 pages of very comprehensive notes. Each slide will cover a number of related topics and the accompanying notes will support the content of the course to be delivered by the trainer.

During the course of the day, participants will undertake one or two exercises (problems) in groups of two or three (depending on the size of the class) which will involve considering what advice should be given to a client in particular circumstances. Participants will discuss the exercise with each other and then with the trainer and will receive a written answer to the problem.

Exercise 1

You are asked to advise on the restructuring of a conglomerate in order to resolve its short term problems and to develop a longer term strategy. The group consists of four subsidiaries which are in the road haulage, parcel delivery, global positioning and property businesses.

Exercise 2

Before finalising the proposal, you are asked to suggest suitable arrangements to: (i) extract an estate agency business from the group; (ii) satisfy the dividend demands of minority shareholders; and (iii) resolve a pollution problem.