This course exposes students to a broad range of financial restructuring techniques that can be applied to improve business performance. Case discussion and visitors help illustrate how various corporate restructuring approaches may be used to increase firm value and to highlight characteristics of potential candidates for different restructuring techniques. Case analysis provides ample opportunity to practice the application of standard corporate valuation methods. Students will gain a basic understanding of corporate governance, with particular focus on agency problems and executive compensation issues.

The first part of the course deals with financial restructuring techniques aimed at strengthening the firm’s competitive situation. Such restructurings can be initiated as a response to poor business performance caused by e.g. changes in technology or customer demand, or to avoid a takeover threat. Topics include divestitures, spinoffs, splitoffs, equity carveouts, tracking stock, leveraged recapitalizations, and leveraged buyouts.

The second part focuses on the restructuring of financially distressed firms. Since bankruptcy provides a threat point for any distressed restructuring, the legal framework of the U.S. bankruptcy code is examined. The topics of this section are private workouts, pre-packaged bankruptcy filings and restructuring in bankruptcy. We discuss the importance of market mechanisms in resolving bankruptcy, including the role of distressed investors and difficulties in valuing bankrupt firms.

This is a course on corporate mergers and acquisitions (M&A). Students will develop skills necessary to structure a deal or form an opinion about a proposed transaction. Topics include value creation in mergers; choice of payment method; valuation of contingent payments; deal protection devices; incentive effects of deal financing; merger arbitrage; defensive tactics; market consensus estimates; accounting and tax issues, and leveraged buyouts. We discuss bidding strategies and takeover tactics. Students get to practice merger negotiations in a team exercise. We also cover the legal and regulatory framework for takeovers, such as filing requirements, fiduciary duties of the target board of directors, and antitrust regulation. The course uses a mix of case analysis, providing ample opportunity to practice the application of standard corporate valuation methods, lectures and visitors.