FNCE30002 Lecture Notes - Lecture 10: Refinancing, Initial Public Offering, Control Premium
Document Summary
Looking at how value is created from changing the structure of a business usually done after merger & acquisitions. Corporate restructuring involves a transaction where a company is either: To better align the interests of shareholders and managers to overcome agency problems in firm. To transfer assets to owners who can better utilise these assets. To provide a sharper focus for management who may lack the skill set to manage different types of business. Reflects new information about the value of various parts of the company to another party. Overinvestment investing beyond all positive npv projects. Cross-subsidisation where poor performing units are kept afloat by the star performers. Found the discount was mitigated (reduced) when the business segments were from related industries. Tax losses are essentially tax deductions used to offset tax payable on future taxable income: pv of tax losses increases for multi-segment firms, but not enough to offset the discount.
