Key Benefits
- Build practical skill in valuing distressed businesses, and modelling debt restructuring options for creditors and debt holders
- Learn the pros and cons of the main divestiture options, such as private sales, spin-offs, IPOs, and equity carve-outs
- Improve your ability to analyse divestiture impacts, including balance sheet deconsolidation, and EPS accretion/dilution
Do You Need to Attend This Course?
This training is suitable for:
Investment bank analysts and junior associates
M&A advisory boutiques junior professionals
Junior restructuring advisors
Corporate Development junior professionals
Finance professionals in industries
Technical Content
Going Concern - Disposals
Why do corporates divest or restructure their assets?
Review of key considerations in corporate modelling: Strategic
Liquidity
Valuation
Tax
Regulatory and anti-competition
Promoted by management, sometimes pushed for by shareholders
Types of divestitures:
Private sale
Spin-off/split-up
Split-off
Carve-out
Financial modelling analysis performed:
Structural impact
Balance sheet deconsolidation
Earnings Per Share (EPS) accretion (dilution) and relative P/Es (Price-to-earnings ratio)
Private Market Sale
Structural considerations: Pre-deal and post-deal in financial modelling structures
Balance sheet deconsolidation
Tax impact of deconsolidation
EPS accretion (dilution)
Reinvesting the sales proceeds
Case study I – Participants model a telecom company’s disposal of its foreign subsidiary. This is a multi-billion-dollar cash and share transaction. Yoy will focus on the balance sheet impact and review the post-transaction leverage ratio impact.
Spin-Off
Definition, advantages & disadvantages: Existing shareholders receive a new share in the spin-off entity
Adjustment of the capital financial modelling structure before the spin-off
Best executed with traded stock for valuation purposes
Ownership structure impact on corporate financial modelling
Balance sheet impact - treatment as dividend-in-kind
EPS accretion (dilution)
Split-up, similar to spin-off, except old parent dissolved
Case study I I – Participants model a three-way spin-off of a multinational engineering company. This includes a pre-transaction leveraging and intra-group dividend payment, followed by the deconsolidation modelling of its two subsidiaries.
Equity Carve-Out
Definition, advantages & disadvantages: Usually, the initial step of a two-step spin-off and split-off
IPO of subsidiary shares (primary/secondary shares)
Financial modelling structures are typically adjusted before the offering
Carve-out structure impact on business restructuring modelling
Balance sheet impact treatment and non-controlling interests
EPS accretion (dilution)
Distressed and Insolvency
Distressed vs insolvency
Distressed refers to the situation where the company is in the hands of the creditors
Insolvency is a legal definition: Balance sheet insolvency
Cash flow insolvency
The link between Enterprise Value and debt value in a distressed scenario:
Equity value is zero, and debt trades below book values
Strategic Options for Distressed Companies
Raising capital (unlikely to be available)
Asset sales or partial disposal
Sell the business as a whole (pre-restructuring at a discount)
Debt restructuring (out-of-court)
Debt restructuring (in-court)
Liquidation
Business restructuring modelling
Valuation Methodologies
Liquidation vs going concern
Liquidation Value: Recovery rate
Going concern:
EBITDA (Earnings before interest, taxes, depreciation, and amortisation) multiples
Restructuring analysis:
Cash flow and debt waterfall modelling with RCF (Revolving Credit Facility), mandatory and accelerated repayment, cash vs PIK (Payment-in-kind) interests
Liquidation Value
Net asset value modelling methodologies
Recovery rate (RR) and loss-given default (LGD): Asset liquidation value is usually estimated as a % of book value
Most liquid assets (cash and marketable securities): 100% recovery rate
For most assets, only a fraction of book value is recoverable
Liquidation fees, dismantling and decommissioning costs:
Assessing the payment priority of assets liquidated
Contractual subordination:
Secured vs unsecured
Senior, subordinated, preferred, and equity
Structural subordination:
Group-level or by borrowing entity
Maturity and guarantees
Case Study III: Modelling of payment priorities under different subordination scenarios.
Debt Restructuring Modelling
Debt package under different business restructuring modelling scenarios: Debt capacity and cash flow repayment capabilities
Debt forgiveness
Payment extensions
Debt-equity swaps
Case study IV – Modelling and valuation of a distressed industrial company under different scenarios: sale as a going concern, liquidation value, and modelling in different types of corporate debt restructuring.
Training Objectives
Modelling for Corporate Restructuring training will cover the following:
Why corporates restructure their assets both for going concern and gone concern scenarios.
The key considerations and the types of divestitures in the corporate business model.
Review business models of famous divestitures and corporate restructuring.
Understand the private market sale.
Master the concept of a subsidiary IPO (International Public Offering). This includes the costs of listing and IPO discount pricing in corporate modelling.
Gain an understanding of spin-offs and equity carve-outs in modelling for corporate restructuring.
Understand the valuation of a distressed company in corporate restructuring modelling.
Model the various options for the debt holders and creditors of a distressed company.
Explore the priority of debt repayment in a liquidation and a debt restructuring model, including debt forgiveness and debt-to-equity swaps.
Training Course Summary
Redcliffe Training's Modelling for Corporate Restructuring course covers the main divestiture options available to a firm as a going concern.
We focus on the private market sale, Initial Public Offering (IPO), spin-off, and equity carve-out. We explain the motives, pros and cons of each structure in detail in light of precedent transactions.
We also discuss the financial modelling impact, balance sheet deconsolidation and EPS accretion (dilution). Spreadsheet work and real divestiture cases are used throughout the financial modelling session.
Much of the course involves Excel modelling and analysis, equipping you with the expertise to analyse divestiture and business restructuring modelling transactions:
Building up from partially complete models on real case scenarios
Running scenarios, iterating and optimising
Your trainer
Course Trainer · 20 yrs experience
- Financial Modelling Courses
Our corporate restructuring modelling specialist has more than 20 years of experience in accounting and investment banking. He is an experienced financial modelling trainer, delivering courses for leading institutions and central banks in the City of London, Wall Street, and around the world. He specialises in:
Corporate Finance
Valuation (Industrials and Banks)
Financial Modelling
M&A
LBOs (leveraged buyouts)
Financial Accounting
Capital Markets
Bank Regulatory Capital
Financial Risks
He began his career as a Credit Analyst at Banque Continentale in Luxembourg. He conducted credit analyses for short and long-term credits and participated in loan syndications. He then worked as a Senior Auditor for Deloitte & Touche in Luxembourg. This included auditing and preparing financial statements for a variety of banks, insurance, investment funds, venture capital, and commercial companies.
He continued his career in Investment Banking at Citigroup (ex-Salomon Smith Barney) in London and New York. He worked on a variety of M&A, LBO and debt offerings for financial services clients. He worked with the EUR 20 billion public offer of Crédit Lyonnais by Crédit Agricole, one of the largest European banking transactions.
He was then Vice-President in the internal M&A department of Barclays Bank in London, where his experience included the acquisition of ABSA for US$5 billion (one of the leading South African banks), the purchase of ING Private Banking in France, and the failed acquisition of Banco Atlantico in Spain.
Recently, he was a Director in the Investment Banking department of Commercial International Bank (CIB), the largest non-government bank in Egypt. He completed several transactions, including two sell-side M&A deals, one follow-on equity offering and a delisting. He worked extensively with leading sovereign wealth funds, private equity firms, and prominent families in the UAE, Qatar, Kuwait, and Saudi Arabia.
Our trainer is a senior advisor to an M&A practice based in Paris and focuses on buy-side and sell-side transactions. This is predominantly in the technology sector.
He has an MBA in Finance from the Kellogg School of Management in Chicago and a Bachelor of Science in Finance from Groupe INSEEC (“International Management Institute of Paris”). He holds « Series 7 » and « Series 63 » US licences. He delivers restructuring financial modelling training in both English and French.
Reviews
No reviews yet for this course. Check back soon.
FAQs
Frequently asked questions for this course will appear here soon.