Chapter_16

Chapter_16 - Alternative Exit and Restructuring Strategies:...

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Alternative Exit and Restructuring Strategies: Reorganization and Liquidation
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Course Layout: M&A & Other Restructuring Activities Part IV: Deal Structuring & Financing Part II: M&A Process Part I: M&A Environment Payment & Legal Considerations Public Company Valuation Financial Modeling Techniques Business & Acquisition Plans Search through Closing Activities Part V: Alternative Strategies Accounting & Tax Considerations Business Alliances Divestitures, Spin-Offs & Carve-Outs Bankruptcy & Liquidation Regulatory Considerations Motivations for Part III: M&A Valuation & Modeling Takeover Tactics and Defenses Financing Strategies Private Company Valuation Cross-Border Transactions
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Learning Objectives Primary Learning Objective: To provide students with an understanding of alternative strategies for failing businesses Secondary Learning Objectives: To provide students with an understanding of Criteria for choosing strategy for failing firms Process for filing for bankruptcy, voluntary and involuntary settlements inside and outside of court, and voluntary and involuntary liquidation
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Rule of Law and Corporate Asset Allocation The smooth functioning of capital markets requires rapid and fair resolution of disputes involving the legal rights of borrowers and lenders Studies show that borrowing costs are lower and access to credit easier in countries which enforce credit rights. Total cost of financial distress (i.e., inability to meet financial obligations) includes the following: --Employee layoffs --Firm under-investment --Eroding community tax base and blight --Customer dissatisfaction with declining product quality and increasing delivery times --Delayed payments to suppliers (including lenders) --Higher borrowing costs --Declining shareholder value Bankruptcy plays key role in minimizing these costs by providing a process for resolving these issues in a timely manner.
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Bankruptcy Applicable to failing firms A firm is technically insolvent if it is unable to pay its liabilities as they come due
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Chapter_16 - Alternative Exit and Restructuring Strategies:...

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