MBA 2010 Corporate Restructuring
Contact hours per week
Thompson, Timothy A.
The course is designed as a capstone class in corporate finance. It takes a valuation perspective on corporate restructuring decisions made by the management of firms. We will be focusing on transactions significantly affecting the corporation's asset strategy (mergers and acquisitions, divestitures), liabilities (distressed debt restructurings: workouts and bankruptcy reorganization), equity claims (spin offs, equity carve outs and tracking stock restructurings), and restructuring employee claims. We will examine transactions from the perspective of the corporation's management and from the perspective of investors. Cases will be the primary method of instruction. There will be some lectures.
While all of business models are potentially relevant, we focus on a finance perspective. The theories applied would be those of managerial finance: discounted cash flow (Weighted Average Cost of Capital - WACC, Adjusted Present Value - APV, Flows to Equity) models for valuing companies; capital structure theories, options pricing models (not in depth), Capital Asset Pricing Model - CAPM, valuation using multiples.
Students participating in this course will become more adept at using financial valuation tools in the myriad of corporate valuation transactions where these tools are invaluable. Special emphasis is placed on evaluating corporate restructuring transactions from different participant perspective
Primarily case method, with some lecture.
30% Group work on cases / Group Presentations
20% Class Participation
50% Written exam
Introduction to course
Introduction to Corporate Restructuring for Value Creation
Lecture on Financial Restructuring I: Capital Structure Choice and Value
Case discussion of Bed, Bath and Beyond case
Lecture on Corporate Valuation: APV, Cross Border Valuation
Corporate Valuation using Adjusted Present Value
Case: LBO of Yell Group
Corporate valuation: private equity perspective (LBO method)
Management buyouts: operational (asset) restructuring, financial restructuring, impact of private equity investor
Analysis of complex corporate restructuring transaction:
Case: Seagate Technology Buyout
Lecture on Distressed-Debt Restructurings/Bankruptcy
Distress exercise #1: Identifying distress, filing decisions
Lecture on Bankruptcy/Security, Seniority, Subordination
Distress Exercise #2: Priority
Lecture: Value creation and redistribution in troubled debt restructurings
Exercise #3: Reorganization Plans
Case: C-Thru Windows Bankruptcy Case (or TBA)
Finish C-Thru case and Course Summary
" Brealy, Richard A., Myers, Stewart C. and Allen, Franklin (2008), "Principles of Corporate Finance", McGraw-Hill. (BMA)
" Additional Handouts.
Relevant readings will be provided in the course readers and on the course web site
Method of examination
Written exam, Group work on cases, Class Participation, and Group Presentations