Modelling for Disposals

£695.00 +VAT

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This course can also be presented face to face in-house or via live in-house webinar.

Modelling for Disposals Course Objectives:

Participants will:

  • Learn why corporates divest or restucture their assets
  • Get an overview of the key considerations and the types of divestitures
  • Attempt the modelling of the above type of divestitures
  • Review models of famous divestitures
  • Have explained to them the private market sale.
  • Master the concept of a subsidiary IPO including the costs of listing and IPO discount pricing
  • Gain an understanding of spin-offs & split-ups and split-off and carve outs
  • Review financial models regarding the above methodologies

Modelling for Disposals Course Content:

Introduction

  • Why do corporates divest or restructure their assets?
  • Review of key considerations
    • Strategic;
    • Liquidity;
    • Valuation;
    • Tax;
    • Regulatory and anti-competition;
  • Promoted by management, sometimes pushed for by shareholders
  • Types of divestitures
    • Private sale;
    • Initial Public Offering (IPO);
    • Spin-off/split-up;
    • Split-off;
    • Carve-out.
  • Financial analysis performed
    • Structural impact;
    • Balance sheet deconsolidation;
    • Earnings Per Share (EPS) accretion (dilution) and relative P/Es.

Private Market Sale

  • Structural considerations
    • Pre-deal and post deal structures
  • Balance sheet deconsolidation
  • Tax impact of deconsolidation
  • EPS accretion (dilution)
  • Reinvesting the sales proceeds

Case study I – T-Mobile USA divestiture to AT&T

Subsidiary IPO

  • Minority vs. majority stake IPO
  • Size of the offering
  • Cost of listing and disclosure requirements
  • Trading multiples as main valuation benchmark
  • IPO discount pricing

Case study II Citigroup listing of Primerica

Spin-Off & Split-Up

  • Definition, advantages & disadvantages
    • Existing shareholders receive a new share in spun-off entity
  • Adjustment of capital structure prior to spin-off
  • Best executed with traded stock for valuation purposes
  • Ownership structure impact
  • Balance sheet impact – treatment as dividend-in-kind
  • EPS accretion (dilution)
  • Split-up similar to spin-off except old parent dissolved

Case study III ITT three-way spin-off in Exelis, Xylem and “old” ITT

Split-Off

  • Definition, advantages & disadvantages
    • Choice between keeping shares in parent company or swapping parent company shares for subsidiary shares
  • Different treatments in over vs. under subscription scenarios
  • Split-off structure impact
  • Balance sheet impact treatment as own shares repurchased
  • EPS accretion (dilution)

Case study IV – Kraft split-off of post cereals business

 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 structures typically adjusted prior to the offering
  • Carve-out structure impact
  • Balance sheet impact treatment and non-controlling interests
  • EPS accretion (dilution)

Case study V Mead Johnson separation from Bristol-Myers Squibb as a two-step process: equity carve-out followed by split-off

Conclusion

  • Review of all strategic alternatives, structures, balance sheet and EPS impacts

Background of the trainer:

The trainer has 15 years of experience in accounting and investment banking at leading firms and is an experienced financial trainer who has delivered courses for financial institutions in the City of London and around the world, in the areas of Corporate Finance, Valuation (Industrials and Banks), Financial Modelling, M&A, LBO, Financial Accounting, Capital Markets, Bank Regulatory Capital, Financial Risks, both in English and French.

Modelling for Disposals Course Summary:

This session covers the main divestiture options available to a firm as a going concern.

We focus on private market sale, Initial Public Offering (IPO), spin-off, split-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 financial impact including balance sheet deconsolidation and EPS accretion (dilution). Spreadsheet work and real divestiture cases are used throughout the session.

Much of the course work involves Excel modelling and analysis, equipping participants with the tools to analyse divestiture transactions:

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

Each participant should bring a laptop to the course to facilitate modelling work

 

What Redcliffe clients are saying about the course:
“Comprehensive, easy to follow with great content!”

     M&A Associate, Goldman Sachs

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“Variety of content and high quality of examples.”

           Corporate Finance Associate, Deloitte

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“Great content and examples and it was helpful to share war stories with other participants”

 Partner, KPMG

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“Very helpful case studies.”

 Senior Consultant, PWC

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Here are some other Financial Modelling Courses which may be of interest

Training Course Title

Training Course Summary

Modelling for Restructuring Get to grips with assessing refinancing risk, market data, debt terms & conditions including different debt products and which companies realistically have access to them
Modelling for Stressed and Distressed Companies Learn about stressed and distressed companies including capital structure analysis & financing issues
Modelling for M&A Master the modelling of integrated financial statements

 

 

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24 September 2018