Corperate Restructure

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  • Topic: Management, Bankruptcy, Restructuring
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Corporate Restructuring
Course Module in Financial Management
Course Modules help faculty select and sequence HBS Publishing titles for use in segments of a course. Each module represents subject matter experts’ thinking about the best materials to assign and how to organize them to facilitate learning. In making selections, we’ve received guidance from faculty at Harvard Business School and other major academic institutions. Each module recommends four to six items. Whenever possible at least one alternative item for each main recommendation is included. Cases form the core of many modules, but we also include readings from Harvard Business Review, HBS background notes, and other course materials. I. Overview of suggested content (HBS cases unless otherwise noted) Title 1. Introduction When Does Restructuring Improve Economic Performance? (CMR Article) Alternative: When a Strategic Plan Includes Bankruptcy (Business Horizons Article) Supplement: Valuing Companies in Corporate Restructuring (HBS Note) 2. Debt Contracts Bankruptcy and Restructuring at Marvel Entertainment Group AND Sealed Air Corp.'s Leveraged Recapitalization (A) Alternative: Arch Wireless 3. Equity Contracts Humana, Inc.: Managing in a Changing Industry Alternative: USX Corp. Supplement: Leveraging the Incumbent's Advantage Author Product Number CMR141 Publication Year 1999 Pages Teaching Note --




















1994 (Rev. 1997) 2005 1994 1996 2003



Gilson Gilson Gilson Iansiti

205024 294062 296050 SMR104

24p 19p 20p 9p

-294130 298085 --

Harvard Business School Publishing 800-545-7685 (Outside the U.S. and Canada 617-783-7600)

Corporate Restructuring: An HBSP Course Module 4. Employee Contracts Scott Paper Co. Alternative: Offshoring at Global Information Systems, Inc. 5. Tax Claims Seagate Technology Buyout

Gilson Fruhan

296048 204144

1996 (Rev. 1997) 2004

28p 19p

298088 204145






II. Rationale for selection and sequencing the items in this module Deciding when a corporate restructuring is appropriate and managing the process well have become increasingly important skills for executives in the last several decades. The leading California Management Review Article “When Does Restructuring Improve Economic Performance?” provides an excellent conceptual and statistical overview of this trend. Summarizing research on 5,000 company restructurings, the authors distinguish and describe situations when three types of restructuring─portfolio, financial, and organizational─are successfu l. The alternative Business Horizons Article describes situations when pursing a type of financial restructuring—a reorganization bankruptcy—is a viable business strategy. This promises creditors maximum repayment in the future if a strategic turnaround is successful. The supplementary technical note “Valuing Companies in Corporate Restructuring” assesses the effectiveness of discounted cash flow (DCF) and market value multiples valuation methods in the context of leveraged restructurings and turnaround timing. Being able to estimate the likely impact of a restructuring on a company’s enterprise value is essential for managers and claimholders. The cases in the module are sequenced by the four main types of claims on a company: debt (segment 2), equity (segment 3), employee (segment 4), and taxes (segment 5). The debt segment pairs two bestsellers, Bankruptcy and Restructuring at Marvel Entertainment Group and Sealed Air Corp.'s Leveraged Recapitalization (A). The Marvel case shows management reacting to a distress situation and debtholder-equityholder conflict. In contrast, Sealed Air illustrates the proactive use of a financial restructuring to stimulate deep organizational change. The...
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