forms of

Corporate
Restructuri
ng
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 OTHER FORMS OF C O R P O R AT E

Corporate restructuring
RESTRUCTURING

Any change in the business capacity or

portfolio that is carried out by inorganic
route or any change in the capital
structure of a company that is not in the
ordinary course of its business or any
change in the ownership of a company
or control over its management or a
combination of any two or all of the
above.
Hence, corporate restructuring may
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 OTHER FORMS OF C O R P O R AT E
RESTRUCTURING
FORMS OF CORPORATE RESTRUCTURING
1. Merger or
Amalgamation
A merger is a combination of two
or more businesses into one business
Amalgamation is the merger of
one or more companies with another
or the merger of two or more
companies to form a new company, in
such a way that all assets and
liabilities of the amalgamating
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 OTHER FORMS OF C O R P O R AT E
RESTRUCTURING

Merger or amalgamation may

take two forms:
1. Merger through Absorption:
where transferor company merges into
the transferee company and the
transferor company stands dissolved
without winding up.
2. Merger through Consolidation:
A consolidation is a combination of two
or more companies into a new
company. In this form of merger, all
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 OTHER FORMS OF C O R P O R AT E
RESTRUCTURING

2. Acquisitions and Takeovers

An acquisition may be defined as
an act of acquiring effective control
by one company over assets or
management of another company
without any combination of
companies. Thus, in an acquisition
two or more companies may remain
independent, separate legal entities,
but there may be a change in control
of the companies.When
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ELLE JAR
 OTHER FORMS OF C O R P O R AT E
RESTRUCTURING
3. Divestiture
Divestiture is a transaction through which
a firm sells a portion of its assets or a
division to another company.
It is also a form of contraction for the
selling company, means of expansion for
the purchasing company. It represents the
sale of a segment (assets, a product line, a
subsidiary) to a third party for cash and
securities.
In short, divestiture means sale of assets,
but not in a piecemeal manner.
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 OTHER FORMS OF C O R P O R AT E
4. Demerger RESTRUCTURING
It is a form of corporate restructuring in which involves sale of
segment of a company for cash or securities. It involves sale of only
some assets of the firm.
These assets may be a plant, division, product line and so on.
Demerger can take three forms:
Spin-off- a way to get rid of underperforming or
non-core business divisions that can drag down
profits.
Split-up- is a transaction in which a company
spin off all of its subsidiaries to its shareholders
and ceases to exit.
Split-off- is a transaction in which some, but not
all, parent company shareholders receive shares
in a subsidiary, in return for relinquishing their
parent companys share.
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 OTHER FORMS OF C O R P O R AT E
RESTRUCTURING
4. Reduction o Capital
It is a process by which a company is allowed to
extinguish or reduce liability on any of its shares
in respect of share capital not paid up, or is
allowed to cancel any paid-up share capital
which is post or is allowed to pay-off any paid
up capital which is in excess of its requirements.
5. Joint Venture
Is an arrangement in which two or more
companies (called joint venture partners)
contribute to the equity capital of a new
company (called joint venture) in pre-decided
proportion.
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 OTHER FORMS OF C O R P O R AT E
RESTRUCTURING
They are typically formed for special purposes for
a limited duration. It is a combination of subsets
of assets contributed by two or more business
entities for a specific business purpose and limited
duration.
Reasons for forming Joint Venture
Build on a company strengths
Spreading cost and risks
Improving access to financial resources
Economies of scale and advantages of size
Access to new technologies and customers
Access to innovative managerial practices
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 OTHER FORMS OF C O R P O R AT E
RESTRUCTURING

6. Buy back of Securities

When a company is holding excess
cash, which it does not require in the
medium term (say three to five years); it
is prudent for the company to return this
excess cash to its shareholders. Buy-back
of securities is one of the methods used to
return the excess cash to its shareholders.

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THANK
YOU !

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What does 'Going Private' mean

Going private is a transaction or a series of

transactions that convert a publicly traded
company into a private entity. Once a
company goes private, its shareholders are
no longer able to trade theirstocksin the
open market.Private equityfirms will
typically purchase a struggling company,
make it into a private entity, reorganize its
capital structure, and issue stocks once a
profit can be realized.
BREAKING DOWN 'Going Private

A company typically goes private when its

stakeholdersdecide that there are no longer
significant benefits to be garnered as a
public company.Privatizationwill usually arise
either when a company's management wants
to buy out the public shareholders and take
the company private (a management buyout),
or when a company or individual makes a
tender offerto buy most or all of the
company's stock. Going private transactions
generally involve a significant amount of
Companies are often taken private when
they need time to restructure their debt or
operations prior to becoming a public
corporation once again.
BREAKING DOWN 'Divestment

Divestment involves a company selling its

assets to improve its value and obtain
higher efficiency. Many companies use
divestment to sell off peripheral assets that
enable their management teams to regain
better focus on the core business. Proceeds
from divestment are typically used to pay
down debt, make capital expenditures, fund
working capital, or pay a special dividend to
a company's shareholders. While most
divestment transactions are deliberate
efforts, selling assets in some cases could be
forced due to regulatory action.
Privatization can refer to the act of
transferring ownership of specified property
or business operations from a government
organization to aprivately ownedentity, as
well as the transition of ownership from a
publicly traded, or owned, company to a
privately owned company. For a company to
be considered privately owned, it cannot
secure funding through publictradeson a
stock exchange.