Mariariaz
Chapter 15
Multinational Restructuring
Lecture Outline
Background on Multinational Restructuring
Trends in International Acquisitions
Model for Valuing a Foreign Target
Assessing Potential Acquisitions After the Asian Crisis
Assessing Potential Acquisitions in Europe
Factors that Affect the Expected Cash Flows of the Foreign Target
Target-Specific Factors
Country-Specific Factors
Example of the Valuation Process
International Screening Process
Estimating the Target’s Value
Changes in Valuation Over Time
Why Valuations of a Target May Vary Among MNCs
Estimated Cash Flows of the Foreign Target
Exchange Rate Effects on the Funds Remitted
Required Return of Acquirer
Other Types of Multinational Restructuring
International Partial Acquisitions
International Acquisitions of Privatized Businesses
International Alliances
International Divestitures
Restructuring Decisions as Real Options
Call Option on Real Assets
Put Option on Real Assets
243
244
International Financial Management
Chapter Theme
This chapter emphasizes that the strategic plan of an MNC can be modified continuously in response to changing global conditions, and multinational restructuring may be needed to achieve the plan.
Some of the more critical issues related to multinational restructuring are discussed.
Topics to Stimulate Class Discussion
1. Why do MNCs consider multinational restructuring?
2. How should MNCs determine whether multinational restructuring is worthwhile?
3. What are common ways by which an MNC can conduct multinational restructuring?
4.
What role does valuation play in the multinational restructuring process?
POINT/COUNTER-POINT:
Can a Foreign Target Be Assessed Like Any Other Asset?
POINT: Yes. The value of a foreign target to an MNC is the present value of the future cash flows to the MNC. The process of estimating a foreign target’s value is the same as the process of estimating a machine’s value. A target has expected
Multinational Restructuring
Lecture Outline
Background on Multinational Restructuring
Trends in International Acquisitions
Model for Valuing a Foreign Target
Assessing Potential Acquisitions After the Asian Crisis
Assessing Potential Acquisitions in Europe
Factors that Affect the Expected Cash Flows of the Foreign Target
Target-Specific Factors
Country-Specific Factors
Example of the Valuation Process
International Screening Process
Estimating the Target’s Value
Changes in Valuation Over Time
Why Valuations of a Target May Vary Among MNCs
Estimated Cash Flows of the Foreign Target
Exchange Rate Effects on the Funds Remitted
Required Return of Acquirer
Other Types of Multinational Restructuring
International Partial Acquisitions
International Acquisitions of Privatized Businesses
International Alliances
International Divestitures
Restructuring Decisions as Real Options
Call Option on Real Assets
Put Option on Real Assets
243
244
International Financial Management
Chapter Theme
This chapter emphasizes that the strategic plan of an MNC can be modified continuously in response to changing global conditions, and multinational restructuring may be needed to achieve the plan.
Some of the more critical issues related to multinational restructuring are discussed.
Topics to Stimulate Class Discussion
1. Why do MNCs consider multinational restructuring?
2. How should MNCs determine whether multinational restructuring is worthwhile?
3. What are common ways by which an MNC can conduct multinational restructuring?
4.
What role does valuation play in the multinational restructuring process?
POINT/COUNTER-POINT:
Can a Foreign Target Be Assessed Like Any Other Asset?
POINT: Yes. The value of a foreign target to an MNC is the present value of the future cash flows to the MNC. The process of estimating a foreign target’s value is the same as the process of estimating a machine’s value. A target has expected