Modelling for Corporate Restructuring

2 Part Course | Learn the practitioner’s guide to modelling for corporate restructuring

A one-day course presented over two-half days in a virtual class

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Download: Course Category Brochure | Course Outline

Part One

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 cash and share transaction. The participants 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 II – 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, 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)

Part Two

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-courts)
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 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.

Our corporate restructuring modelling course trainer has more than 20 years of experience in accounting and investment banking. He is an experienced financial modelling trainer who has delivered courses for leading institutions and central banks in the City of London, Wall Street and around the world in the areas of Corporate Finance, Valuation (Industrials and Banks), Financial Modelling, M&A, LBO (leveraged buyouts), Financial Accounting, Capital Markets, Bank Regulatory Capital and Financial Risks, both in English and French.

He began his career as a Credit Analyst at Banque Continentale in Luxembourg, where 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 companies, 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, where he worked on a variety of M&A, LBO and debt offerings, mainly for financial services clients. He was involved in the EUR 20 billion public offer of Crédit Lyonnais by Crédit Agricole, one of the largest European banking transactions.

He then worked as a 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, where he has successfully 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, mainly 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.

This Modelling for Corporate Restructuring training will cover the following objectives:

Be introduced to why corporates restructure their assets both for going concern and gone concern scenarios.
Get an overview of 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), including 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.

Our practical Modelling for Corporate Restructuring course is delivered by an experienced trainer, an M&A (Mergers and Acquisitions) banker with years of divestiture experience in Europe and the Middle East
Comprehensive valuation material covering all different types of divestitures and restructuring modelling
Step-by-step, easy-to-follow Excel models illustrating key forms of divestitures and corporate restructuring
Delegates are encouraged to bring their divestiture and financial restructuring modelling challenges to ‘solve’ during the session

Our corporate restructuring training 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. The motives, pros and cons of each structure are explained in detail in light of precedent transactions. We also discuss the financial modelling impact, including 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 participants with the tools to analyse divestiture and business restructuring modelling transactions:

Building up from partially complete models on real case scenarios
Running scenarios, iterating and optimising.

The trainer really explained in a clear manner and took his time in every aspect (distressed situations - going concern). Good Cases to study and exercise. Nothing but a positive experience.
Good case examples with actual figures (non-fictive). The trainer took great care of the people’s questions (exhaustive answers).

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(min. 50 participants)