Restructuring for Growth

From GM and Delphi to DuPont and Conoco to Kraft Foods and Phillip Morris, history proves that restructuring works wonders for shareholder value. In the first half of 2001, restructuring transactions dominated the IPO market, accounting for 81 percent of the USD 23 billion raised in IPOs. The first quarter of 2000 produced over 40 announced spin-offs, and in 1999, there were 71 announced spin-offs. From tracking stocks to LBOs, evidence suggests that redeploying equity value creates substantial returns for parent company shareholders. Evidence also shows that equity carve-outs, spin-offs, and other "liquidity events" create substantial value for the holders of subsidiary equities. Between 1985 and 1998, the stock of spin-offs outperformed the S&P 500 by 11.3 percent per year, and the stock of carve-outs outperformed the S&P 500 by 10.1 percent per year. Carve-out transactions typically also have boosted the parent company's stock by an average 4 percent in the 90 days following the carve-out. Once considered exotic, transactions to redeploy equity have become accepted tools for increasing both parent shareholder returns and subsidiary performance. Restructuring for Growth explores these alternative methods of creating shareholder value for a larger company through the redeployment of the equity of a wholly- or partially-owned operation. Throughout the book, examples, case studies, and statistical analyses illustrate important topics. Restructuring for Growth shows readers how restructuring via various financial transactions leads to growth and improves shareholder value. In today's highly competitive, sideways market, executives and managers must look at all angles for improving value. Business leaders must understand all of the options available to them when seeking to increase shareholder value. Creating and financing new companies and subsidiaries is an important tool for meeting that challenge. While most books look at enhancing value in terms of management styles or techniques, Restructuring for Growth takes a hard look at the financial strategies available to increase shareholder value. Readers will find in-depth information on key topics, including: - Initial public offerings as value-building events - Characteristics of successful spin-offs and carve-outs - Sale and merger alternatives With a special emphasis on growth companies, Restructuring for Growth is a timely guide for managers ready to face the challenge of improving shareholder value.

About the Author :
John C. Michaelson is president of Needham Asset Management, which manages more than $1.2 billion in private venture and hedge fund partnerships and public mutual funds. Prior to that, Michaelson ran corporate finance at Needham & Company, a leading mid-sized investment banking firm, where he was involved in hundreds of complex advisory assignments and public offerings. Michaelson cofounded the restructuring group at First Boston, where he worked on numerous large restructurings in the 1980s, and has been quoted and featured in The Wall Street Journal, The New York Times, and other prominent publications. He is a graduate of both Oxford University and Harvard Business School.