Mergers & Acquisitions:-

U-1 Corporate Restructuring

By-
Ms. Shivangi Sinha
New Law College ( BVDU), Pune
 Outcome:-
After going through this unit, you will get to know
about:-

• Concept of Corporate Restructuring

• Objectives
• Modes & Forms.
Concepts:-
Mergers and acquisitions (M&A) are defined as
consolidation of companies. Differentiating the two
terms, Mergers is the combination of two companies
to form one, while Acquisitions is one company taken
over by the other. M&A is one of the major aspects of
corporate finance world.
Types:-
1) Horizontal merger- Two companies that are in
direct competition and share the same product lines
and markets i.e. it results in the consolidation of firms
that are direct rivals. E.g. Exxon and Mobil, Ford and
Volvo, Volkswagen and Rolls Royce and Lamborghini

(2) Vertical merger- A customer and company or a

supplier and company i.e. merger of firms that have
actual or potential buyer-seller relationship eg. Ford-
Bendix.
Continued:-
(3) Conglomerate merger- generally a merger between companies
which do not have any common business areas or no common
relationship of any kind. Consolidated firma may sell related
products or share marketing and distribution channels or
production processes.
(4)Concentric Mergers-Concentric mergers take place between
firms that serve the same customers in a particular industry, but
they don’t offer the same products and services. Their products may
be complements, product which go together, but technically not the
same products. For example, if a company that produces DVDs
mergers with a company that produces DVD players, this would be
termed as concentric merger, since DVD players and DVDs are
complements products, which are usually purchased together. 
Corporate Restructuring:-
Meaning:- Corporate restructuring is a corporate action
taken to significantly modify the structure or the operations
of the company. This usually happens when a company is
facing significant problems and is in financial jeopardy.

Concept:-Restructuring is the corporate management
term for the act of reorganizing the legal, ownership,
operational, or other structures of a company for the purpose
of making it more profitable, or better organized for its
present needs. The basic nature of restructuring is a zero-
sum game
Objectives of Corporate Restructuring:-
Growth.
Technology
Government Policy
Exchange Rate Fluctuations
Economic Stability
To reduce dependence
Modes of Corporate Restructuring:-
Money related Restructuring: This kind of rebuilding may happen
because of a serious fall in the general deals in the light of un
favourable financial conditions. Here, the corporate substance may
modify its value design, obligation adjusting plan, the value property,
and cross-holding design. This is done to support the market and for
the benefit of the organization.
Hierarchical Restructuring: Organizational Restructuring suggests
an adjustment in the authoritative structure of an organization, for
example, decreasing its degree of the chain of importance, updating
the activity positions, scaling down the representatives, and changing
the detailing connections. This sort of rebuilding is done to cut down
the expenses and to satisfy remarkable obligations so that business
tasks may proceed in some way without any hindrance.
Different Forms of Corporate
Restructuring :-
Merger: This is where at least two business elements are
combined either by method for ingestion or amalgamation or
by the framing of another organization. The merger of at least
two business substances is commonly done by the trade of
protections between the procuring and the objective
organization.
Demerger: Under this corporate rebuilding procedure, at least
two organizations are joined into a solitary organization to get
the advantage of cooperative energy emerging out of such a
merger.
Disinvestment: When a corporate element sells out or
exchanges a benefit or auxiliary, it is known as "divestiture".
Continued:-
Takeover/Acquisition: Under this methodology, the obtaining
organization assumes, generally speaking, the responsibility for
the objective organization. It is otherwise called “Acquisition”.

Joint Venture (JV): Under this methodology, a substance is

framed by at least two organizations to embrace budgetary acts
together. The resultant substance is known as the ‘Joint
Venture’. Both the gatherings consent to contribute in extent as
agreed to shape another substance and furthermore share the
costs, incomes, and control of the organization.
Thank You